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Economy in Brief

U.S. Trade Deficit Continued to Narrow
by Tom Moeller September 11, 2007

The U.S. foreign trade deficit narrowed very slightly in July to $59.2B from a little revised $59.4B in June. The figure was quite near Consensus expectations for a deficit of $59.0B. While only a small improvement, the average deficit of $59.4 during the last eight months compares to an average of $64.8B during the prior twelve.

Much of the narrowing of the deficit owes to strength in U.S. exports which rose 2.7% (14.8% y/y). Exports of non-auto consumer goods rose 4.2% (13.2% y/y) while exports of capital goods surged 5.3% (13.8% y/y). Advanced technology goods exports slipped 8.6% but the y/y gain of 13.2% suggests some strength. Exports of autos and products rose 14.6% m/m and a blazing 20.9% y/y.

Overall imports rose 1.6% but imports of nonpetroleum products rose 1.6% (4.3%% y/y). The slower gain versus exports is clearly due to the relative performance of the U.S. (weak) and foreign (strong) economies. Imports of nonauto consumer goods increased 1.1% (7.5% y/y) while capital goods imports slipped 0.3% (+5.4% y/y). Imports of advanced technology products fell 1.6% (+12.2% y/y).

The value of petroleum product imports fell 3.4% (-3.8% y/y) but the price of Brent crude oil rose to $75.9.

The U.S. trade deficit in goods with China deepened sharply m/m to $23.8B and versus a deficit of $19.6 the prior July.

Foreign Trade  July June Y/Y 2006 2005 2004
U.S. Trade Deficit $59.2B $59.4B $67.6B
$758.5 $714.4B $612.1B
Exports - Goods & Services 2.7% 1.3% 14.8% 12.7% 10.9% 13.7%
Imports - Goods & Services 1.8% 0.8% 5.1% 10.4% 12.9% 16.8%
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