U.S. Trade Deficit Shrinks as Imports Decline

The U.S. trade deficit in goods and services eased to $54.0 billion during July from $55.5 billion in June, revised from $55.2 billion. A $54.0 billion deficit had been expected in the Action Economics Forecast Survey. Exports of goods & services rose 0.6% (-6.6% y/y) following a 1.9% decline in June while imports of goods & services eased 0.1% (+0.1% y/y) following a 1.7% decline.

The deficit on goods trade narrowed to $72.5 billion from $74.2 billion as goods exports improved 0.9% (-0.7% y/y) on the heels of a 2.7% drop. Nonauto consumer goods exports surged 9.6% (10.6% y/y) following a 10.7% drop. Auto exports improved 4.6% (7.3% y/y) after a 3.7% decline. Exports of capital goods surged 1.9% (-0.0% y/y) and made up much of the prior month's drop. Falling by 2.0% (-4.1% y/y) were exports of foods, feeds & beverages after improving 0.4% in June. Industrial supplies & materials exports declined 3.8% (-7.8% y/y) as oil prices fell. Imports of goods eased 0.3% (+0.9% y/y) following a 2.1% decline. Imports of nonauto capital goods declined 2.6% (-2.3% y/y) following a 0.6% fall. To the upside, nonauto nonfood consumer goods imports rose 1.1% (7.5% y/y) after a 1.6% decline. Foods, feeds & beverages imports gained 0.6% (4.2% y/y) and recouped the June shortfall. Automobile & parts imports rose 0.3% (7.6% y/y) following a 1.8% decline.

Imports of industrial supplies & materials jumped 2.0% (-8.9% y/y), recovering a piece of June's 6.9% decline. The value of energy-related products rose 6.7% (-16.4% y/y) while the quantity of these imports gained 9.8% (-7.0% y/y). Petroleum imports gained 0.4% (-16.8% y/y) while nonpetroleum goods imports eased 0.3% (+0.6% y/y). The price of crude oil fell m/m to $56.48 per barrel and was down from its high of $64.54 in July 2018.

The surplus on trade in services was little changed m/m at $19.7 billion, though that was down from $21.7 billion twelve months earlier. The value of services exports eased 0.1% (+0.7% y/y), off for the third month in the last four. Travel exports declined 0.3% (-0.4% y/y). Exports related to the use of intellectual property fell 0.5% (-2.7% y/y). Imports of services improved 0.1% (5.2% y/y). Travel imports eased 0.4% (+5.3% y/y). Charges for the use of intellectual property rose 0.9% (2.3% y/y).

The seasonally adjusted trade deficit in goods with China eased to $29.6 billion as U.S. exports declined 12.7% y/y and imports fell 13.7% y/y. The seasonally adjusted trade deficit with Japan narrowed to $5.9 billion as U.S. exports rose 0.8% y/y and imports surged 7.5% y/y. The trade deficit with the European Union declined to $15.9 billion as U.S. exports increased 6.7% y/y and imports increased 7.2% y/y.

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.