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Economy in Brief

U.S. Trade Deficit Deepens With A Jump In Imports
by Tom Moeller September 10, 2009

Improvement in the U.S. economy probably is behind the July deterioration in the international trade deficit to $32.0B versus a little-revised June deficit of $27.5B. Consensus expectations had been for a deficit of $27.0B. Nonoil imports reversed six months of decline with a 6.1% m/m gain, though that still left them down by one-quarter from the year-ago level. A 3.6% rise in oil imports reflected higher prices. Real petroleum imports slipped m/m and are off 10.8% y/y with the recession. For the third straight month, U.S. exports posted a strong gain. The competitive foreign exchange value of the dollar helped exports to rise by 2.2%, about as they did during May and June. The gains pared the YTD drop to 4.0%.

Adjusted for price inflation overall and for higher oil prices specifically, the trade deficit in goods deepened somewhat during July to $38.8B after having fallen to the lowest level since June 1999. It was down from the peak of $47.6B last July. Real non-auto consumer goods imports jumped 5.3% m/m but remained off 12.5% from last year. Real automotive vehicles & parts imports jumped 21.3% and pared the y/y drop to 33.8%. Non-auto capital goods imports rose 4.3% but that still left them off one-quarter from last year.

The rise in petroleum imports was driven by higher crude oil prices. Prices rose to a July average of $62.48 per barrel versus the February low of $39.22. The recession and the rise in prices, however, prompted a decline in the volume of petroleum imports. Despite a June gain they have fallen roughly ten-percent since December.

Reflecting the competitive value of the dollar, real merchandise exports jumped 3.9% after two months of lesser increase. The chained dollar value of auto exports led the gain with a 24.7% increase (-40.9% y/y). Non-auto consumer goods exports rose a lesser 2.7% (-14.6% y/y) while real capital goods exports gained 2.2% (-20.0 y/y) for the second month of strong increase.

The international trade data can be found in Haver's USECON database. Detailed figures are available in the USINT database.

Foreign Trade  July June Y/Y 2008 2007 2006
U.S. Trade Deficit $32.0B $27.5B $64.9B (7/08) $695.9 $701.4 $760.4
 Exports - Goods & Services 2.2% 2.1% -22.4% 11.2% 13.2% 13.3%
 Imports - Goods & Services 4.7% 2.5% -30.4% 7.6 6.0% 10.8%
  Petroleum 3.6% 24.3% -55.0% 37.0% 9.4% 20.1%
  Nonpetroleum Goods 6.1% -1.1% -25.7% 1.5% 4.8% 9.1%
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