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Economy in Brief

U.S. Trade Deficit Widened Further in August
by Sandy Batten  October 6, 2020

• Both exports and imports increase.

• Real trade balance also widened, points to meaningful drag on Q3 GDP.

The U.S. trade deficit in goods and services widened further in August to $67.1 billion from $63.4 billion in July (revised from $63.6 billion). A $66.0 billion deficit had been expected in the Action Economics Forecast Survey. Exports increased 2.2% m/m (-18.3% y/y), a slowdown from 9.6% m/m and 8.3% m/m jumps in June and July, respectively. Imports rose 3.2% m/m (-8.5% y/y) following a 10.9% m/m surge in July as the economy continued to rebound from the coronavirus shutdown.

The nominal deficit in goods trade widened to another record, $83.9 billion in August from $80.8 billion in July. The August reading was slightly larger than the $82.9 billion deficit in the advance report. Exports of goods increased 3.0% m/m (-13.3% y/y) following double-digit monthly jumps in June and July. The August increase was led by a 10.9% m/m jump in exports of industrial supplies and materials and a 10.5% m/m rise in exports of foods, feeds and beverages. Imports of goods rose 3.3% m/m (-4.2% y/y) following a 12.4% jump in July. The August gain was led by a 7.1% m/m rise in imports of nonauto consumer goods and a 6.3% m/m increase in imports of autos and parts (while large, a slowdown from 41.5% m/m in July and 107.8% m/m in June. Even with their sharp rebound in June, July and August, auto imports are still 8.3% below their pre-COVID level.

The real goods trade balance widened further to a record $92.3 billion (chain-weighted 2012$) in August from an upwardly revised $91.1 billion in July. The marked widening of the real deficit in July and August indicate that the trade sector will be a meaningful drag on Q3 real GDP.

The surplus on trade in services narrowed to $16.8 billion in August from $17.4 billion in July. Exports of services edged up 0.3% m/m (-27.8% y/y) led by a 1.3% m/m increase in exports of "other business services." Reflecting the ongoing adverse impact of the pandemic, exports of travel services fell 5.8% m/m (-77.2% y/y), their sixth consecutive monthly decline. Imports of services rose 2.4% m/m (-26.9% y/y). Rebounds in imports of travel and transportation accounted for most of the August increase.

The seasonally adjusted goods trade deficit with China narrowed to $26.4 billion in August from $28.3 billion in July. Exports to China surged 18.5% m/m while imports slipped 0.4% m/m. The SA trade deficit with the European Union widened to $15.7 billion in August from $13.1 billion. Exports fell 1.4% m/m while imports rose 7.3% m/m. The trade deficit with Japan widened to $4.3 billion in August from $3.4 billion in July. Exports jumped up 12.4% m/m, but imports surged 19.1% m/m.

The international trade data, including relevant data on oil prices, can be found in Haver's USECON database. Detailed figures on international trade are available in the USINT database. The expectations figures are from the Action Economics Forecast Survey, which is carried in AS1REPNA.

Foreign Trade in Goods & Services (Current $) Aug Jul Jun Aug Y/Y 2019 2018 2017
U.S. Trade Deficit ($ bil.) 67.10 63.37 53.46 50.78 576.86 579.94 513.79
Exports of Goods & Services (% Chg) 2.2 8.3 9.6 -18.3 -0.4 6.4 6.7
Imports of Goods & Services (% Chg) 3.2 10.9 4.6 -8.5 -0.5 7.5 6.7
  Petroleum (% Chg) 14.6 16.2 16.9 -41.0 -14.0 20.8 27.2
  Nonpetroleum Goods (% Chg) 2.8 12.2 4.7 -1.0 -0.4 7.4 5.5
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