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Economy in Brief

U.S. Trade Deficit Deeper Due to Oil
by Tom Moeller October 13, 2005

Higher oil prices caused the U.S. foreign trade deficit to deepen in August to $59.0B from a July deficit of $58.0B which was little revised. Consensus expectations had been for a slightly deeper August deficit of $59.5B.

Imports of goods & services jumped 1.8%. Petroleum imports surged 8.7% (41.4% y/y) driven by a 7.4% (44.1% y/y) rise in the per barrel price of crude petroleum though in both September and in early October the price of Brent crude has fallen to $59.53/bbl. from the weekly August peak over $ 66.00/bbl.

Nonpetroleum goods imports rose 0.9% (8.0% y/y) in August against a 2.9% (12.7% y/y) rise in exports. Recent strength in exports shrank the nonpetroleum deficit to its narrowest since March.

Capital goods imports recovered 0.5% (10.2% y/y) following a 2.4% decline in July while a 0.3% (+8.8% y/y) decline in nonauto consumer goods followed a 1.9% July drop. Imports of advanced technology products jumped 1.6% (NSA, 8.4% y/y).

Total exports surged 1.7% after the modest 0.5% July up tick. Capital goods exports gained 3.8% (11.8% y/y) while exports of advanced technology products recovered some momentum after a July decline and rose 7.2% (NSA, 15.9% y/y). Nonauto consumer goods exports fell 0.2% (+9.4% y/y).

Services exports rose 0.7% (10.7% y/y). Private travel services fell 0.4% (+14.2% y/y) following a 2.0% July drop but "other" private services jumped 1.6% (5.3% y/y).

The US trade deficit with China deepened to a record $18.5B ($161.9B in 2004) as imports surged 5.1% (NSA, 23.8% y/y). The US trade deficit with Japan improved slightly to $6.6B ($75.6B in 2004) due to a 4.9% (NSA, 15.7% y/y) jump in exports. The monthly trade deficit with the Asian NICs was about unchanged at $1.2B ($21.9B in 2004) for the fourth consecutive month and the deficit with the European Union also was about unchanged at $11.3B ($109.3B in 2004).

U.S. Jobs Gained and Lost through Trade: A Net Measure from the Federal Reserve Bank of New York is available here.

Foreign Trade Aug July Y/Y 2004 2003 2002
Trade Deficit $59.0B $58.0B $54.2B (8/04) $617.6B $494.8B $421.2B
  Exports - Goods & Services 1.7% 0.5% 12.1% 12.6% 4.6% -3.0%
  Imports - Goods & Services 1.8% -0.6% 10.9% 16.6% 8.5% 2.1%
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