U.S. June Advance Goods Trade - Consensus data leaves net exports as a negative for Q2 GDP
June’s advance goods trade deficit of $101.5bn is in line with expectations but shows weakness in both imports and exports. The deficit is down from May’s $105.9bn but remains well above the January-April average of $82.0bn and implies that net exports will be a significant negative in Q2 GDP.
Exports fell by 1.8%, surprisingly extending a 5.3% fall in May which followed four straight strong gains. With export prices having fallen by 0.6% the fall can only be partly explained by prices, though prices probably explain why industrial supplies saw the steepest fall, by 4.4%. Autos at 5.1% and consumer goods at 3.2% both saw strong gains but are both down yr/yr, while overall exports are up by 14.8% yr/yr.
Imports fell by 2.6% to correct a 4.0% increase in May. Import prices rise by 0.3% making the decline slightly steeper in real terms. Here the fall was broad based with all major components falling. Imports are however up 16.6% yr/yr.
Released with the advance trade data were advance estimates for wholesale and retail inventories, respectively up by 0.3% and unchanged. The in line with expectations trade data and the subdued net increase in inventories suggest no significant revisions are requited for Q2 GDP expectations. The release is due on Thursday and our forecast is for an annualized gain of 1.4%, with negative contributions of 1.8% from net exports and 0.5% from inventories.