U.S. Trade Deficit Deepens Modestly; Reaches Record Depth With China

The U.S. foreign trade deficit deepened to $39.1 billion in July compared to a revised $34.5 billion in June, initially reported as $34.3 billion. A $38.6 billion deficit had been expected in the Action Economics survey. The 1.6% rise (0.8% y/y) in imports, reversing June's 2.2% drop, prompted the trade gap's deterioration. Exports slipped 0.6% (+3.3% y/y) following a 2.2% June jump. In chained 2009 dollars, the deficit in goods deepened to $47.7 billion. Real imports rose 1.6% (+0.8% y/y) while real exports fell 1.0% (+2.3% y/y).

The value of petroleum imports rebounded 7.7% (-0.9% y/y) as the quantity of petroleum product imports gained 12.3% (-3.1% y/y. The price of crude oil  rose slightly m/m to $97.07 but remained down from the $109.69 high reached last year. Real imports less petroleum gained 1.4% in July (2.2% y/y). Also to the upside, real automotive imports rose 3.8% (3.1% y/y) while real consumer goods imports excluding autos rose increased 1.8% (3.8% y/y). Real imports of foods, feeds & beverages inched up 0.2% (4.2% y/y). Working the other way, the real value of capital goods imports edged 0.6% lower (+0.8% y/y). Nominal services imports inched up 0.2% (0.6% y/y). Travel imports gained 0.2% (3.1% y/y) but passenger fares declined 0.5% (+5.7% y/y).

The constant dollar value of nonauto consumer goods exports slumped 8.3% (+1.4% y/y) while real capital goods exports were off 3.3% (+0.8% y/y. Real auto exports fell 1.5% (+0.1% y/y). To the upside, real exports of industrial supplies gained another 4.1% (10.3% y/y). Real exports of foods, feeds and beverages increased 3.4% (-18.5% y/y). Services exports were unchanged (6.8% y/y). Travel exports inched up 0.3% (10.7% y/y) as the dollar's low value prompted more visits to the U.S. from abroad. Passenger fares fell 3.7% (-0.1% y/y).

By country, the July trade deficit in goods with mainland China deteriorated to a record depth of $30.1 billion. Exports to China rose 2.6% y/y while U.S. imports increased 2.3% y/y. With Japan, the deficit deepened sharply to $6.8 billion, nearly its deepest in five years. U.S. exports fell 7.4% y/y but imports jumped 7.0% y/y. The deficit with the European Union cratered to $13.9 billion and offset its sharp June improvement. U.S. exports increased 2.6% y/y while imports gained 5.5% y/y.

The international trade data can be found in Haver's USECON database. Detailed figures are available in the USINT database. The expectations figures are from the Action Economics consensus survey, which is carried in the AS1REPNA.