U.S. Trade Deficit Narrows, Due Mainly to Surge in Soybean Exports

The U.S. trade deficit in goods and services decreased to $39.5 billion in July from a slightly revised $44.7 billion in June. The Action Economics Forecast Survey had expected a much more modest move to a $43.0 billion deficit. The actual outcome is the result of a 1.9% increase in exports (-2.0% y/y) and an 0.8% decrease in imports (-1.8% y/y). The reduction in the deficit was driven mainly by two specific moves, a jump in soybean exports of $3.6 billion and a drop in petroleum imports of $628 million.

Among exports, total goods rose 3.0% (-2.6% y/y). This included a striking 34.0% surge in foods, feeds & beverages (34.2% y/y), mainly in soybeans. Autos & parts rose 3.0% (-4.3% y/y), and industrial materials & supplies gained 1.4% (-10.9% y/y). There were declines of 0.5% in capital goods (excluding autos) (-3.2% y/y), 0.1% in consumer goods (-2.0% y/y) and 12.2% in "other" goods (-11.6% y/y). Exports of services inched lower by 0.1% (-0.3% y/y). Transport was down 2.0% (-4.9% y/y), finance by 1.6% (-8.0% y/y), maintenance & repair by 1.4% (+15.9% y/y), and charges for intellectual property by 0.1% (-4.8% y/y). Other categories had gains, including travel of 1.3% (1.5% y/y), telecommunications 0.8% (7.1% y/y), government services 0.8% (-1.2% y/y) and other business services 0.1% (4.4%).

Imports of goods fell back in July by 1.0% (-2.4% y/y). The decline was led by consumer goods 3.0% (+1.6% y/y) and "other" goods 2.8% (+1.5% y/y), with lesser decreases in capital goods 1.5% (-1.5% y/y), and autos 0.2% (-4.9% y/y). On the other side, food, feeds & beverages imports grew 1.9% (+1.0% y/y). Interestingly, the total category of industrial supplies & materials imports rose 1.0% (-7.8% y/y) even as petroleum imports fell back somewhat. Nonmonetary gold and various metal products had the main increases. The value of energy-related petroleum imports did drop, by 5.0% (-27.4% y/y); the cost per barrel of crude oil was $41.02, up $1.64 from June, while the quantity of energy-related product imports fell 6.4% (-1.8% y/y), reversing much of a June surge. Services imports increased 0.2% (+1.2% y/y), as travel rose 1.0% (+7.8% y/y), telecommunications by 0.7%, intellectual property charges 0.5% (+0.2% y/y), finance and other business by 0.4% each (-4.3% y/y and +2.7% y/y, respectively). Maintenance & repair costs dropped 3.3% (-10.4% y/y), transport charges fell 1.0% (-1.7% y/y) and government services were down 0.7% (-11.7% y/y).

By country, the trade deficit with mainland China widened a bit further to $30.3 billion in July from $29.8 billion in June. Exports rose, by 3.8% (-3.7% y/y), and imports also rose, by 2.4% (-4.2% y/y). The trade balance with Japan was little changed at a deficit of $6.1 billion after June's $5.9 billion. Exports to Japan edged up a mere 0.1% (-1.8% y/y) but imports rose 2.0% (+2.7% y/y). The trade deficit with the European Union narrowed slightly again to $12.3 billion from $12.8 billion. Exports and imports to the EU-28 both decreased, reversing their June moves; exports fell 9.5% (unchanged y/y) and imports were down 7.7% (-8.6% 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 Forecast Survey, which is carried in the AS1REPNA.