The U.S. trade deficit narrowed by US$6 million to US$37.2 billion in June, as expected.

BMO Nesbitt Burns says that the 1.7% monthly gain in exports helped the trade gap shrink for the first time since March, but the shortfall remains at record levels. “Exports remain below year-ago levels, but have been on a steady, if unspectacular, upward trend since February. Imports were strong early in the year, but the unsteady recovery and decreased demand for energy products cooled import growth in June.”

BMO reports that the U.S. trade deficit with the NAFTA partners saw the greatest narrowing, as the balances with Canada and Mexico were cut by reduced imports of oil and autos.

RBC Financial comments, “These trade figures were in line with market expectations and relatively close with government estimates used in calculating advanced second quarter GDP and are therefore unlikely to cause much of a stir in financial markets.”

“The pause in the U.S. economic recovery should soften imports over the next few months and lead to a further narrowing of the trade gap,” suggests BMO. “The deficit is nevertheless headed for yet another full-year record and will remain a threat to the U.S. dollar.”