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Economy in Brief

U.S. Foreign Trade Deficit Shrinks in July
by Tom Moeller  September 7, 2022

• Deficit is smallest in nine months.

• Exports rise slightly, while imports decline sharply.

• Petroleum imports rise but crude oil prices fall.

The U.S. trade deficit in goods and services (BOP basis) fell to $70.65 billion during July from $80.88 billion in June, revised from $79.61 billion, and from a record $106.92 billion in March. A $70.4 billion deficit had been expected in the Action Economics Forecast Survey. Exports rose 0.2% (21.1% y/y) after a 1.7% June surge. Imports fell 2.9% (+16.4% y/y) after slipping 0.2% in June.

The trade deficit in goods (customs value) narrowed to $90.19 billion in July from $99.05 billion in June. It was the smallest deficit since October and compared to a $89.06 billion deficit in the advance report released on August 26th. Exports of goods rose 0.3% (23.2% y/y) following a 1.8% gain. Industrial supplies declined 1.2% (44.7% y/y). Exports of foods, feeds & beverages weakened 7.8% (+16.8% y/y). Nonauto consumer goods exports fell 3.4% (+7.8% y/y) but auto exports rose 6.7% (13.6% y/y). Exports of capital goods gained 4.6% (8.6% y/y). Imports of goods fell 2.9% (+16.1% y/y) in July following little change in June. Nonauto consumer goods imports declined 9.8 % (+11.9% y/y) while auto imports rose 5.8% (+12.9% y/y). Foods, feeds & beverages fell 5.3% (+7.9% y/y) while capital goods imports edged 0.7% higher (+15.5% y/y). Imports of industrial supplies fell 2.4% (+30.3% y/y).

Petroleum imports increased 2.2% (59.6% y/y) in July, the sixth straight month of strong increase, following a 3.0% June rise. Nonpetroleum imports, however, fell 3.5% in July (+12.5% y/y), the fifth decline in six months. The cost of crude oil eased to $96.77 per barrel from $100.63 per barrel in June.

The real (inflation-adjusted) goods trade deficit fell to $103.41 billion (chained 2012 dollars) in July from $113.82 billion in June. It was the smallest deficit since October. Real exports of goods rose 3.2% (10.0% y/y) after a 1.0% June gain. Real imports of goods fell 2.1% (+7.4% y/y), the fifth decline in six months. Shrinkage in the real trade deficit added 1.4 percentage points to real GDP growth in the second quarter.

The surplus on services trade improved to $20.44 billion in July from $18.38 billion in June. The surplus remained significantly below a record high of $26.87 billion in January 2018. Exports of services rose 1.1% (15.3% y/y) after a 0.9% rise in June. Services imports weakened 2.2% in July (+16.7% y/y) following a 1.2% increase.

The goods trade deficit with China fell to a seasonally adjusted $32.97 billion from $36.89 billion in June. Exports rose 7.5% (-1.1% y/y) while imports fell 6.2% (+20.4% y/y). The trade deficit with Japan increased to $5.49 billion from $4.67 billion as exports fell 4.0% (+9.1% y/y) and imports rose 4.9% (0.2% y/y). The goods trade deficit with the European Union fell sharply to $11.92 billion in June. Exports surged 5.8% (36.2% y/y) and imports weakened 8.5% (+5.8% y/y). It was the smallest deficit since August 2017.

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 in AS1REPNA.

The Fed's latest Beige Book, covering regional economic conditions, is available here.

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