The U.S. trade gap widened sharply in August, largely on nonoil imports but with oil imports also contributing. Exports continued to grow but only modestly. The overall U.S. trade deficit increased to $46.3 billion from $42.3 billion in July. The latest trade gap came in wider than the median market forecast for a $44.3 billion deficit. Exports edged up 0.2 percent, following a 2.0 percent gain in July. Imports rebounded 2.1 percent, following a 2.1 percent decline in July. Nonoil goods imports in August rebounded 2.2 percent, following a 3.0 percent decrease the month before.
The worsening in the trade gap was primarily in the nonpetroleum deficit which grew to $35.9 billion in August from $33.2 billion the previous month. The petroleum goods gap expanded to $21.9 billion from $20.8 billion in July.
By end-use categories, the rise in goods exports was led by a $1.2 billion increase in feeds & beverages. The industrial supplies component advanced $0.6 billion.
The boost in imports was seen in all major expenditure components. However, the largest increase was in consumer goods, up $1.4 billion. Large gains were also seen in capital goods excluding autos, up $0.9 billion, and in automotive, up $0.7 billion.
Turning to selected bilateral numbers (which are not seasonally adjusted), it appears that a big part of the boost in imports came from China as the U.S. deficit with that county hit a record $28.0 billion, up from $25.9 billion in July. The next largest bilateral gap was with OPEC at $9.0 billion and compared to $8.0 billion in July. The deficit with the European Union shrank to $8.1 billion from $9.9 billion. Gaps rose with Mexico, to $6.0 billion from $5.3; Japan, to $5.8 billion from $4.9; and Canada, to $2.2 billion from $1.4 billion. The U.S. had modest surpluses with Korea, $1.3 billion, and Taiwan, $1.2 billion.
Today's report is a mixed bag. Exports were sluggish but that is likely to change with the weakened dollar. Imports were up notably, suggesting that businesses are more optimistic than they have been letting on. Imports gained for both the consumer sector and for equipment investment. Businesses would not be adding to inventories unless they believed demand is picking up. On a technical note, today's trade figure will lead to forecasters tapping down their number for third quarter GDP growth.
Market Consensus before announcement
The U.S. international trade gap in July narrowed to $42.8 billion from $49.8 billion in June. 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.