Trade Deficit

This has the dollar firmer. The dollar moves ALL markets these days...

The U.S. international trade deficit shrank in August on both lower oil and consumer goods imports, reflecting a still sluggish economy. Exports, however, did edge rise, largely on industrial supplies, services, and auto shipments to Canada. The overall U.S. trade gap unexpectedly narrowed to $30.7 billion from a revised $31.9 billion shortfall in July. The August deficit was much smaller than the market forecast for a $33.0 billion differential. In the latest month, exports improved by 0.2 percent while imports declined 0.6 percent. The shrinking of the trade deficit was due to a narrower petroleum shortfall which came in at $16.5 billion compared to $17.8 billion the previous month. The nonpetroleum gap expanded to $24.3 billion from $23.6 billion in July.

The improvement in the trade deficit was due to both a rise in exports and a dip in imports. While exports were up 0.2 percent, there were divergent trends in components. Goods exports actually declined 1.6 percent but would have been up were it not for a sharp decline in civilian aircraft exports. Nonetheless, exports of industrial supplies and autos were up significantly. Also, services exports were up on the "other transportation" component which includes items such as business, professional, and technical services, insurance services, and financial services.

Imports fell on lower imports of crude oil and consumer goods. The narrowing in the petroleum deficit was due to fewer barrels brought in as the price of imported oil rose to $64.75 per barrel from $62.48 in July.
Year-on-year, overall exports rose to minus 20.7 percent from minus 22.2 percent in July while imports improved to down 28.6 percent from minus 30.3 percent the prior month.

Overall, the August trade data show modest improvement in real terms and will add slightly to third quarter growth.