US Exports Dip in July Increasing Trade Deficit

The U.S. trade deficit increased slightly in July as exports slipped a bit more than imports.

The Commerce Department said Wednesday that the trade gap reached $43.7 billion in July, up from $43.5 billion in June. Exports declined $600 million to $194.4 billion, while imports slid $400 million to $238.1 billion.

The trade deficit had narrowed in the spring as exports of U.S. computer products and farm goods rose. U.S. exporters benefited from a decline in the value of the dollar, which makes American products cheaper overseas. Solid global growth also helped, as economies from Europe to Asia to Latin America are expanding simultaneously. Exports in June were the highest in 2 1/2 years.

Still, the trade gap this year is running ahead of last year’s level as rising consumer spending and greater business investment draws in more imports.

usdcad Canadian dollar graph, September 7, 2017

A larger trade deficit typically translates into slower U.S. growth, because it means Americans are buying more goods from overseas than from the U.S.

In July, exports of chemicals, petroleum, and plastics fell. But shipments overseas of civilian aircraft jumped by $1.1 billion and exports of telecom equipment, aircraft parts, and industrial machinery rose.

At the same time, imports of meat and vegetables increased, pushing agricultural imports in July to $11.7 billion, the highest on record.

In the first seven months of the year, the trade gap rose $27.9 billion, or 9.6 percent, to $319.1 billion, compared with the same period in 2016. Imports of crude oil, computers, telecom equipment, and autos increased during that period.

via Mainichi

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza