Record Manufacturing and Europe Trade Deficits Help Widen June Monthly U.S. Trade Gap

Alan Tonelson |

The U.S. combined trade deficit in June rose for the third straight month to reach its highest level since West Coast ports labor woes and winter weather helped produce a March figure that was the worst in six years. Fueling the June total were the highest trade shortfalls on record in manufacturing and in goods with the European Union, along with the widest monthly trade deficit in high tech products in seven months. In addition, the June figures revealed that the trade deficit influenced strongly by free trade agreements and other trade policy decisions has now reduced America's economic growth during this historically weak recovery by nearly 21 percent. June also saw the disappearance of May's U.S. merchandise trade surplus with Canada – the first such surplus with the nation's largest trade partner on record.

Here are selected highlights of the latest monthly (June) trade balance figures released this morning by the Census Bureau:

  • Record monthly shortfalls in manufacturing and in merchandise trade with the European Union helped lift the June U.S. total trade deficit to $43.84 billion, its third straight monthly increase since a March figure pushed by West Coast ports problems and winter weather to the highest monthly total in six years.
     
  • The overall deficit increased by 7.08 percent over May's downwardly revised figure of $40.94 billion. U.S. goods and services exports fell fractionally to $188.58 billion from an upwardly revised May figure of $188.71 billion, and combined imports rose by 1.20 percent to $232.414 billion from a downwardly revised $229.65 billion.
     
  • The June goods and services trade deficit figure nudged the year-to-date total 0.63 percent higher than 2014's comparable amount. Overall exports have fallen by 2.87 percent while goods and services imports have decreased by 2.24 percent.
     
  • The trade deficit in manufacturing, which leads the economy in productivity and many innovation measures, and produces an outsized number of high wage jobs, hit $72.71 billion in June.  This figure was 9.26 percent greater than May's $66.55 billion total, and 1.04 percent higher than the ports- and weather-bolstered $71.96 billion level recorded for March.
     
  • U.S. manufactures exports improved by 1.63 percent sequentially in June, but the far larger amount of manufactures imports jumped by nearly three times as much – 4.76 percent.
     
  • Largely as a result, the manufacturing trade deficit this year so far is running 15.85 percent ahead of last year's record total. Year-to-date manufactures exports are down 4.61 percent, while imports are up by 2.85 percent.
     
  • America's new record merchandise trade deficit with the European Union of $14.45 billion topped May's level by 15.70 percent.  It exceeded the previous all-time monthly high of $13.93 billion, set in July, 2013, by 4.38 percent.
     
  • U.S. goods exports to the economically troubled grouping dipped by 1.50 percent on month in June, while goods imports rose by 5.49 percent.
     
  • In June, the U.S. trade deficit in advanced technology products hit $8.80 billion, 21.71 percent greater than the May shortfall of $7.23 billion and the highest level since November's $11.45 billion. U.S. high tech goods exports worsened by 8.18 percent on month while imports jumped by 11 percent.
     
  • This high tech trade deficit is now running 5.98 percent ahead of last year's comparable total.
     
  • The June trade figures also showed that the increase in the trade deficit strongly influenced by trade agreements and other trade policy decisions – the real non-oil goods deficit – has now cut the inflation-adjusted growth of the current historically weak U.S. economic recovery by 20.69 percent through the second quarter of this year.
     
  • The cumulative after-inflation growth hit delivered to the economy has now reached just over $396 billion since the recovery officially began in mid-2009. And nearly all of this damage has been done in the private sector.
     
  • June also saw an historic development in U.S.-Canada trade come to an end. In May, the United States ran its first monthly goods surplus with its largest trade partner ever – $648 million. But in June, the United States was back in deficit – to the tune of $2.46 billion.
     
  • China's economy may be showing signs of trouble, but its trade with the United States looks healthy. America's goods trade gap with the PRC totaled $31.46 billion in June, 3.32 percent higher than May's $30.45 billion figure – as both U.S. merchandise imports and exports grew – and the highest such level since October's $32.52 billion.
     
  • Year-to-date, the U.S. Goods deficit with China is up 9.80 percent over last year's record level, with American merchandise imports 5.89 percent higher but U.S. goods exports 4.50 percent lower.

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