WASHINGTON, Aug 13 (AFP): The US trade deficit unexpectedly shrank in June as a weak dollar stoked exports, offsetting record crude oil imports and a politically sensitive growing gap with China, official data showed yesterday.
The June trade deficit shrank a hefty 4.1 per cent to 56.8 billion dollars, the smallest gap since March, the commerce department said.
It was the second consecutive month the trade gap narrowed, and overturned market expectations it would swell to 61.9 billion dollars.
The commerce department revised lower the May trade deficit to 59.2 billion dollars from its initial estimate of 59.8 billion.
"The weak dollar has become a major driver of economic growth," said Joel Naroff of Naroff Economic Advisers.
"The dollar is probably where it should be as it has made US products competitive in a world where global trade is central to economic growth," he added.
The weak dollar in June helped lift exports 4.0 per cent to 164.4 billion dollars, while imports increased by a modest 1.8 per cent to 221.2 billion dollars as the world's largest economy faced housing and financial headwinds.
Economists said the surprising robust trade data should lead to an upward revision of second-quarter gross domestic product growth, which was initially estimated at 1.9 per cent.
"US growth is doing much better than domestic spending would indicate, both because exports are booming and because some of the weakness in domestic demand is being passed on to the rest of the world through lower imports," said Nigel Gault, economist at Global Insight.
Crude oil and Chinese imports accounted for almost the entire June trade deficit.
At a record 117.13 dollars a barrel on average, the oil deficit hit 36.4 billion dollars, a record high that represented more than half the trade deficit.
Oil prices, which had surged since February 2007, when a barrel was worth 50.64 dollars, have fallen recently, which should ease pressure on US imports.
By contrast, the trade deficit in non-petroleum products was the smallest since February 2003.
The trade gap with China rose by 1.8 per cent to a seasonally adjusted 21.4 billion dollars from 21.0 billion in May. Critics accuse China of manipulating its yuan currency to unfairly maintain a trade advantage that has cost thousands of US jobs.
