The U.S. Department of Commerce reported Tuesday morning that the trade deficit decreased about 22 percent on the month in June, from $44.1 to $34.2 billion, marking the smallest trade gap in about four years.
Total June exports increased $4.1 billion to to $187.1 billion while imports decreased $5.8 billion to $231.2 billion. Economists were expecting a much more modest reduction in the trade deficit, to $43 billion.
The June goods deficit shrank $9.7 billion to $53.2 billion while the services surplus increased $0.2 billion to $1.8 billion. Increased exports were cited by the U.S. Bureau of Economic Analysis as a source of acceleration in its advance estimate of second-quarter gross domestic product growth, and improving exports could lead to an upward revision of the second estimate.
In June, the U.S. trade deficit with China decreased from $27.9 to $26.6 billion, and the deficit with the European Union decreased from $10.8 to $7.1 billion. The trade surplus with Hong Kong increased from $3 to $3.4 billion, and the surplus with Australia increased from $1.4 to $1.7 billion.
For the three moths ended June, the U.S. Bureau of Economic Analysis recorded an average trade deficit of $39.5 billion, compared to an average deficit of $40.5 billion in the first quarter.
Generally speaking, climbing exports can be taken as a sign of increasing foreign demand for U.S. goods and services. However, the June decline in imports can be interpreted as an indicator of weak domestic demand for foreign goods.