U.S. August Trade Deficit Reverses Part Of Its Earlier Improvement

The August U.S. foreign trade deficit deteriorated to $46.3B following July's improvement to a little-revised $42.6B. Nevertheless, the Q3 deficits stand to roughly equal those of Q2 and, as a result, exert little drag on GDP growth. The August deterioration owed to a 0.2% increase in exports which lagged the 2.1% gain in imports. The August deficit was deeper than Consensus expectations for a shortfall of $44.1B.

Exports gained a slim 0.2% after their 2.0% jump during July. Nevertheless, exports remained up 18.0% from last year due to the weak value of the dollar helping the competiveness of U.S. products. The gain in total exports was led by a 16.1% jump (12.6% y/y) in food & beverages. That was followed by a 1.8% gain (27.8% y/y) in industrial supplies & materials and a 1.4% (26.9% y/y) rise in autos and parts. Consumer goods exports inched up just 0.3% (10.9% y/y). Capital goods exports fell 3.7% (20.7% y/y) as exports of civilian aircraft fell by nearly one-half (-4.5% y/y) and more-than-reversed the July increase. Exports of computers added moderately to their July surge and were up one-third from last year. The lower value of the dollar encouraged visits to the U.S. and pushed up travel exports by 14.4% y/y while passenger fares rose by one-quarter versus last year. Exports of other private services rose 7.4% versus 2009.

Strength in imports again showed itself with a 2.1% monthly increase that reversed the July drop. Imports of nonauto consumer goods jumped by 3.5% (21.1% y/y). Auto imports rose 3.4% (41.6% y/y) while capital goods imports increased a lesser 2.6% (27.6% y/y). Imports of foods and feeds rose 1.9% (16.3% y/y). The value of all energy-related products rose 2.6% (29.9% y/y) as the per barrel cost of crude petroleum rose to $73.47 (13.4% y/y). The quantity of petroleum imports also rose 14.1% y/y. Imports of services gained 0.5% (9.2% y/y) as travel abroad rose 5.3% y/y. Passenger fares fell 1.4% (+13.4% y/y) and reversed their July gain. Other private services imports including education services, financial services, insurance premiums and losses, telecommunications services and business, professional & technical services rose 4.0% y/y.

By country, the trade deficit with mainland China deteriorated to a record $28.0B. Trade with China surged as exports and imports both jumped by roughly one-third versus last year. The trade deficit with Japan of $5.8B was the deepest since October 2008. Imports rose by one-third y/y with U.S. economic recovery and exports also rose by one-quarter. With the European Union, the trade deficit narrowed slightly to $8.1B as imports increased 23.2% y/y but exports rose a lesser 16.7%.

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