US trade deficit narrowed in June

The US trade deficit was narrowed in June, reaching a three-and-a-half year low.

It dropped by 22.4 per cent to $34.2 billion (£22.3 billion) in June, which is the smallest gap since October 2009 and is a further good sign for the nation's economic recovery.

The Commerce Department confirmed that the percentage contraction for the month was also the largest since February 2009.

May's trade shortfall – which was previously reported to be $45 billion – was revised to $44.1 billion, while speculation has risen that the US government could up its growth forecasts.

"All else being equal, this could mean a net upward revision worth about 0.8 percentage points and take second-quarter growth to 2.5 per cent," said Wells Fargo economist Tim Quinlan.

Imports of goods and services were shown to be down by 2.5 per cent in June to $225.4 billion.

The US economy remains the largest in the world, but it is being caught by China.

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