The U.S. goods trade deficit fell to its lowest level in nearly two years in June. The Commerce Department said Tuesday the gap narrowed 10.8% to $86.0 billion, down from $96.4 billion in May. That was well below economists’ forecasts.
Imports dropped by $11.5 billion, or 4.2%, with the steepest decline seen in consumer goods. Items like electronics, apparel, and household products plunged 12.4%. It was the largest monthly drop in over a year.
Economists believe businesses accelerated purchases earlier in the year to get ahead of possible tariff hikes. That led to a sharp pullback in June.
The shift is expected to boost second-quarter GDP. Several major banks, including Goldman Sachs and J.P. Morgan, raised their estimates after the report.
The Atlanta Fed now forecasts that GDP grew at a 2.9% rate in Q2, up from its earlier estimate of 2.4%. That’s a strong rebound from the first quarter, when GDP contracted 0.5%. Trade was a major drag then, subtracting a record 4.61 percentage points from growth.
Exports dipped slightly in June, falling 0.6% to $178.2 billion. Industrial supplies exports fell 8.1%. But other categories were strong. Capital goods exports jumped 4.7%. Shipments of food and beverages rose 4%. Consumer goods exports were also up, climbing 1.5%.
Year over year, the trade gap has shrunk by $12.8 billion, or 13%. Imports are down 2.5%, while exports have risen 3.6%. Economists say this may reflect the impact of Trump’s trade policies and recent deals that encourage U.S. manufacturing.
Even with the GDP boost, the broader economic picture remains uneven. The labor market is softening. Job openings fell by 275,000 in June. Hiring dropped by 261,000. Confidence among consumers also declined. More people reported that jobs are harder to find.
Inventory data was mixed. Retail inventories rose 0.3%, mainly due to a 0.9% increase in motor vehicles. Wholesale inventories were up 0.2%. But when vehicles are excluded, retail inventories were flat. That could limit future output gains.
The Federal Reserve is expected to hold interest rates steady this week. The current range is 4.25% to 4.50%. Trump has pushed for lower borrowing costs, but the Fed has not moved since December.
The full trade report for June will be released next week. It will include services and inflation-adjusted numbers. A revised GDP estimate for the second quarter is due in late August.