The numbers: The U.S. trade deficit in goods narrowed 5.6% to $98.2 billion in June, according to the Commerce Department’s advanced estimate released Wednesday.
After jumping in May, the deficit has narrowed for three straight month. This is the smallest deficit since November.
Economists polled by Econoday were looking for the deficit to narrow only slightly to a $103.2 billion deficit.
Key details: Exports of goods rose $4.4 billion to $181.5 in June. Imports fell $1.5 billion to $279.7 billion.
The data is not adjusted for inflation. The complete report on the international trade deficit, which will include inflation-adjusted data, will be released on Aug. 4.
According to the report, wholesale inventories were up 1.9% in June for the second straight month.
Retail inventories were up 2% after a 1.6% gain in May. Nonauto retail inventories were up 1.6%.
Big picture: Trade data has been volatile during the pandemic. Essentially, the U.S. consumer has been the “buyer-of-last-resort” for world economy. With the International Monetary Fund warning the global economy might soon fall into a recession, trade activity might shrink with weaker activity impacting exports.
The narrowing of the deficit in June could provide a boost to second-quarter GDP growth, to be released Thursday.
Some economists are predicting a contraction in GDP in the second quarter, which would be the second straight negative quarterly print. That has been a common definition of a recession, although, as is the case with so much about the economy during the pandemic, many economists and Federal Reserve officials say “this time is different” and the U.S. economy remains healthy.
Market reaction: Stocks DJIA, +0.46% SPX, +1.34% were set to open higher Wednesday on strong earnings reports.