In July, the US trade deficit stayed broadly stable from the previous month. The trade balance showed a marginal widening in the deficit from a revised $41.9 billion deficit in June to a shortage of $42.0 billion in July. The breakdown is somewhat disappointing as both exports (-1.0% M/M) and imports (-0.8% M/M) fell from the previous month. Imports dropped already for a fourth straight month, while exports fell for the first time in three months. Weakness in exports was based in automotive (4.8% M/M), industrial supplies (-5.6% M/M) and consumer goods (-2.7% M/M), but was partly offset by a surge in exports of foods & beverages (16.7% M/M) led by an sharp increase in exports of soybeans.
The decline in imports was led by industrial supplies (-3.6% M/M and capital goods (-1.2% M/M) and softened somewhat by higher imports of automotive (1.9% M/M), food & beverages (1.3% M/M) and consumer goods (1.0% M/M). Excluding petroleum, the trade deficit widened from $19.4B to $21.1B as the petroleum deficit narrowed for a fourth consecutive month. The trade deficit with the EU rose to its highest level since 2007 due to a record monthly fall in US exports to the region and also the trade deficit with China rose to a record, due to record high imports from China. While the trade deficit was somewhat smaller than expected, the details are poor as both exports and imports dropped with exports to the EU suffering where growth is stagnating and also exports to China rose only slightly.