U.S. Trade Deficit Fell to Its Lowest Level in 11 Months in August

The Bureau of Economic Analysis and the Census Bureau said that the U.S. trade deficit fell from $43.56 billion in July to $42.40 billion in August, its lowest level in 11 months. The improvement in the deficit in August came from somewhat higher goods exports (up from $128.64 billion to $129.21 billion) combined with a slight decline in goods imports (down from $193.93 billion to $193.63 billion). In addition, the service sector trade surplus (up from $21.74 billion to $22.03 billion) was at its highest point since June 2015.

The underlying goods exports data were mixed. There were increased exports for consumer goods (up $1.02 billion), non-automotive capital goods (up $407 million) and automotive vehicles and parts (up $60 million), with reduced exports for both industrial supplies (down $954 million) and foods, feeds and beverages (down $417 million). On the positive side, capital goods exports were at levels not seen since April 2015. Likewise, the data for goods imports were also varied. There were fewer goods imports for industrial supplies (down $523 million), non-automotive capital goods (down $495 million) and foods, feeds and beverages (down $80 million). Those declines were enough to offset increased imports for automotive vehicles and parts (up $675 million) and consumer goods (up $99 million).

For manufacturers, exports have trended in the right direction through the first eight months of this year – a welcome development after weaker data in each of the past two years. Using non-seasonally adjusted data, U.S.-manufactured goods exports totaled $722.20 billion year-to-date in August, up 4.04 percent from $694.16 billion one year ago.

This reflects better year-to-date figures in five of the top six markets for U.S.-manufactured goods: Canada (up from $178.76 billion to $186.41 billion), Mexico (up from $151.30 billion to $159.40 billion), China (up from $69.73 billion to $80.21 billion), Japan (up from $40.73 billion to $43.90 billion), and Germany (up from $32.54 billion to $34.76 billion). The lone exception was our fifth largest trading partner, the United Kingdom (down from $36.86 billion to $34.12 billion), with marginally softer exports to that nation year-to-date this year versus last.

Chad Moutray

Chad Moutray

Chad Moutray is chief economist for the National Association of Manufacturers (NAM) and the Director of the Center for Manufacturing Research for The Manufacturing Institute, where he serves as the NAM’s economic forecaster and spokesperson on economic issues. He frequently comments on current economic conditions for manufacturers through professional presentations and media interviews. He has appeared on Bloomberg, CNBC, C-SPAN, Fox Business and Fox News, among other news outlets.
Chad Moutray

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