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Friday May 27th, 2016 3:00AM

US trade gap narrows to lowest level in 5 months

By The Associated Press
WASHINGTON (AP) -- The U.S. trade deficit fell in June to its lowest level since January as imports dropped sharply, led by lower shipments of cellphones, petroleum, and cars.<br /> <br /> The trade deficit fell 7 percent in June to a seasonally adjusted $41.5 billion, from $44.7 billion in May, the Commerce Department said Wednesday.<br /> <br /> Exports rose 0.1 percent to $195.9 billion, a record high. Imports fell 1.2 percent, the most in a year, to $237.4 billion.<br /> <br /> Imports of petroleum products fell, cutting the trade deficit in petroleum to its lowest in four years.<br /> <br /> The unexpected decline suggests that growth may have been stronger in the second quarter than the government initially estimated. A lower trade deficit can boost economic growth when it shows Americans are buying more U.S. products and fewer overseas goods.<br /> <br /> The economy grew at a 4 percent annual rate in the April-June quarter, the government said last week. But that figure included an estimate of the June trade deficit that was higher than Wednesday's figure.<br /> <br /> Ian Shepherdson, chief economist at Pantheon Macroeconomics, said in a note to clients that the deficit figures indicate growth may have been as high as 4.3 percent in the second quarter. The government will revise its figure for the April-June quarter later this month.<br /> <br /> Imports surged in the first four months of this year, pushing the trade deficit to a two-year high in April. A slowdown in imports was likely after the surge, economists said.<br /> <br /> June's decline comes after the trade deficit was a huge drag on the economy earlier this year, slowing growth by 1.7 percentage points in the first quarter. The economy shrank at a 2.1 percent seasonally adjusted annual rate in that quarter, the worst showing since the recession.<br /> <br /> But the government estimates that the trade gap was a much smaller drag in the second quarter, subtracting 0.6 percentage points from growth.<br /> <br /> The trade deficit has widened in the first six months of this year to $260 billion, up from $242.7 billion in the first half of 2013. While exports have increased, imports have risen even more. But higher imports suggest that consumers and businesses are spending more.<br /> <br /> In 2013, the trade deficit declined by 11.4 percent. That reflected in part a boom in U.S. energy production that cut into America's dependence on foreign oil, while boosting U.S. petroleum exports to a record high.<br /> <br /> The nation's trade balance in oil has continued to improve this year. The U.S. had a petroleum trade deficit of $105.3 billion in the first half of this year, down from $125.7 billion last year.<br /> <br /> The U.S. deficit with the 28-nation European Union narrowed 9 percent in June from May to $11.2 billion, as exports to the region rose and imports fell. The gap with China, however, increased 4.5 percent to $30.1 billion, as exports rose but imports increased by much more.
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