Washington – The U.S. trade deficit in June declined to a four- month low even though imports from China hit an all-time high, the Commerce Department reported Tuesday.
Demand for Chinese goods has remained strong despite recalls of unsafe products this year.
In other economic news, inflation at the wholesale level jumped 0.6 percent in July, driven up by higher energy costs. However, outside of energy, wholesale inflation remained under control with core prices rising 0.1 percent.
The trade deficit dropped to $58.1 billion in June, a 1.7 percent decline from May.
It was a bigger improvement than had been expected and left the deficit at its lowest level since February. So far this year, the deficit is running at an annual rate of $705.5 billion, 7 percent lower than last year’s record deficit of $758.5 billion.
Analysts forecast that this trend will continue and allow the United States to finally record an annual drop in the deficit for the first time after five straight record imbalances.
Economists noted that the June deficit was much smaller than the one assumed by the Commerce Department when it published its preliminary figure for overall economic growth in the April-June quarter. Some suggested that with the boost from trade, the original growth estimate of 3.4 percent at an annual rate could be lifted as high as 4.2 percent.
With consumer spending and confidence under pressure from a slumping housing market and recent turbulence in the financial markets, the boost from export growth will help ward off the threat of a recession, analysts said.
