Highlights
The trade gap shrank sharply in July on both a rebound in exports and dip in imports. The overall U.S. trade deficit narrowed to $42.8 billion from $49.8 billion in June. The latest shortfall was much smaller than the consensus forecast for a $46.8 billion deficit. Exports rebounded 1.8 percent, following a 1.3 percent decline in June. Overall imports declined 2.1 percent after increasing 3.1 percent the prior month. Nonoil imports fell 3.0 percent, following a 4.6 percent jump in June.

The improvement in the trade gap was largely seen in the nonpetroleum deficit which shrank to $33.2 billion in July from $39.7 billion the prior month. The petroleum goods gap also improved, narrowing to $20.9 billion from $21.3 billion in June.

By end-use categories, the boost in goods exports was led by a $2.3 billion jump in capital goods excluding autos. A large part of this--$1.4 billion-was civilian aircraft. This still left a moderate $0.9 billion outside of aircraft. Also gaining were industrial supplies, up $0.5 billion. Automotive exports were down $0.4 billion. The feeds & beverages and consumer goods ex autos components were essentially unchanged though down negligibly.

The drop in imports was broad based though following a large overall increase in June. Consumer goods fell $1.9 billion; autos were down $0.7 billion; capital goods ex autos declined $0.6 billion; and industrial supplies-which include oil-slipped $0.4 billion. Foods, feeds & beverages edged down $0.1 billion.

Today's report is good news for adding a little lift to third quarter GDP growth. And manufacturers certainly will be happy about the resumption of export growth. But it appears that businesses may be tapping down their expectations for consumer spending with imports of consumer goods down. But that dip did follow a strong gain in consumer goods imports in June.

On the news, equity futures rose. Also, initial jobless claims fell sharply and more than expected, further adding to lift in equities.

Market Consensus before announcement
The U.S. international trade gap in June spiked to $49.9 billion from $42.0 billion in May. Exports fell 1.3 percent, following a 2.5 percent gain in May. Overall imports advanced 3.0 percent in June after rising 2.8 percent the month before. The widening of the trade gap was primarily in non-oil. The nonpetroleum deficit widened to $40.0 billion in June from $32.2 billion the prior month. The petroleum goods gap, however, narrowed to $21.2 billion from $21.5 billion in May.

2010 Release Schedule

Released On: 1/12 2/10 3/11 4/13 5/12 6/10 7/13 8/11 9/9 10/14 11/10 12/10 Release For: Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct