Trade deficit narrows in June

European markets trade higher

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NEW YORK (CNNMoney.com) -- The U.S. trade deficit contracted in June, according to a government report released Tuesday, surprising economists who expected an increase.

The Commerce Department reported that imports exceeded exports by $56.8 billion, down from a revised $59.2 billion in May.

Economists had expected the gap to widen to $61.9 billion, according to a consensus estimate compiled by Briefing.com.

Exports in June were $164.4 billion, up $6.4 billion or 4.1% from $158 billion in May.

Fay Johnson, a statistician with the U.S. Census Bureau, said this month's exports are the highest in the nation's history, topping the last record set in May.

The weaker dollar helped drive exports of industrial supplies and materials, capital goods and American foods, beverages, consumer goods and autos.

The growth in exports has helped the U.S. economy by boosting gross domestic product, but has a price, according to Bernard Baumohl, chairman of the Economic Outlook Group.

"This is good for GDP, but it makes our economy more reliant than ever on growth of sales overseas. Had it not been for exports, our economy would have been negative," Baumohl said.

The value of imports, driven by high fuel prices, also rose to $221.2 billion - $3.9 billion or 1.8% more than May imports of $217.2 billion.

A big drop was felt in imports for consumer goods, a sign of the weakening U.S. economy. Imports sank in consumer goods, feeds and beverages, and capital goods from May. There were increases in imports in industrial supplies and materials, and automotive vehicles.

Fuel prices drive imports

Petroleum accounted for 20.1% of June's imports, according to Johnson, the Census statistician. For the month prior, petroleum accounted for 17.9% of imports. That's up from June 2007, when petroleum accounted for 13.6% of goods and services, Johnson said.

Americans also imported more oil than in May, up 1.36%.

A big drop was felt in imports for consumer goods including food and beverages, a sign of the weakening U.S. economy. Imports in industrial supplies and materials and automotive vehicles increased.

The largest trade gap exists between the U.S. and China. From May to June, that gulf widened by $400 million to $21.4 billion, according to the Census Bureau.

This month's trade deficit is the most narrow since March's $56.5 billion gap.