The trade deficit of the United States in June 2023 experienced a reduction as there was a decrease in imports.

During the month of June 2023, the trade deficit of the United States decreased as there was a greater decline in imports compared to exports. This resulted in a reduction of the goods deficit by $2.8 billion.

US Trade Balance Highlights:

• In the month of June, the deficit decreased to $65.5 billion.
• The goods deficit saw a decline of $2.8 billion, reducing it to $88.2 billion.
• The surplus in services experienced a small decline, reaching $22.7 billion.

US Trade Balance Overview

The trade balance of the United States in June 2023 showed a narrowing in both the goods and services deficit. This was driven by a decrease in both imports and exports. The U.S. Bureau of Economic Analysis and the U.S. Census Bureau reported that the monthly international trade deficit decreased from $68.3 billion in May (revised) to $65.5 billion in June. The goods deficit saw a decrease of $2.8 billion, reaching $88.2 billion in June. Additionally, the services surplus experienced a slight decline of less than $0.1 billion, reaching $22.7 billion in June. These figures provide insights into the current state of U.S. international trade and may shape traders' expectations in the near term.

Exports Trend

In the month of June, exports from the United States reached a total of $247.5 billion, showing a small decrease of $0.3 billion compared to May. Specifically, the export of goods decreased by $0.2 billion, reaching $165.1 billion in June. This decline in goods exports was primarily driven by a decrease in industrial supplies and materials, particularly in crude oil which saw a reduction of $0.5 billion. However, some sectors experienced growth, such as capital goods, where other industrial machinery and telecommunications equipment reported increases of $0.5 billion and $0.3 billion respectively. On the other hand, the export of services experienced a slight decline of $0.2 billion, resulting in a total of $82.3 billion in June.

Import Overview

In June, imports into the United States amounted to $313.0 billion, showing a decrease of $3.1 billion compared to May. The import of goods decreased by $2.9 billion, reaching a total of $253.3 billion. Within the goods category, there was a notable decline in the import of capital goods, particularly computers, which saw a decrease of $1.6 billion. The industrial supplies and materials sector also reported a decline in import volumes. However, the automotive segment experienced a noticeable increase, with the import of passenger cars increasing by $1.7 billion. On the other hand, the import of services slightly decreased by $0.2 billion, reaching a total of $59.7 billion in June.

Supply and Demand Outlook

The three-month moving average showed an increase in the goods and services deficit by $1.6 billion, reaching $69.4 billion for the period ending in June. This was due to a decrease in both average exports and imports by $3.6 billion and $1.9 billion, respectively. However, looking at year-to-date figures, there has been a significant improvement, as the deficit has shrunk by 22.3% compared to the same period in 2022. This suggests a positive trend in narrowing the deficit over time.

Short-term Forecast

Based on the current trends, the short-term forecast for imports and exports is cautiously bearish. The real goods deficit decreased by 3.0%, indicating that trade imbalances are expected to continue in the coming months. The ongoing decline in both exports and imports reflects broader economic factors and will be important for traders to closely monitor.

Canada Trade Balance Highlights

1. In June, merchandise exports in Canada experienced a decline of 2.2%.

2. The trade deficit in Canada expanded to $3.7 billion.

3. In a year-on-year comparison, the real terms export in Canada showed an increase.

Overview of Canada's Trade Balance:

 June, Canada experienced a significant shift in its trade dynamics as both exports and imports declined. This resulted in a deeper merchandise trade deficit, pushing it into negative territory.

June's Trade Figures

In June, Canadian merchandise exports contracted by 2.2%, while imports saw a more modest reduction of 0.5%. As a result, the merchandise trade deficit with the global market expanded from $2.7 billion in May to $3.7 billion in June.

Analysis of Exports

 Digging into the numbers, exports decreased by 2.2% in June, following a 3.0% drop in May. This downward trend was observed in 9 out of the 11 product sections. Interestingly, when looking at exports in real or volume terms, there was a 1.1% decrease in June. Additionally, export prices have been consistently declining, falling for the 11th time in the past 12 months.

Year-on-Year Perspective

 Comparing June 2022 to June 2023, total export prices in Canada plummeted by a significant 14.2%. However, during this period, the total value of exports decreased by 12.3%. This indicates that in real terms, exports saw an increase.

Short-term Forecast

Considering the recurring fall in export prices and the overall declining trend in trade figures, the outlook for Canada's trade balance appears bearish. However, the increase in exports in real terms may offer some relief to traders and policymakers. It is advised for traders to stay updated with global trade dynamics and currency fluctuations.