Lucia Muticani
WASHINGTON (Reuters) – The U.S. trade deficit narrowed sharply in August as exports rose to a record high, suggesting trade may have little or no impact on economic growth in the third quarter. are.
A smaller-than-expected trade gap reported by the Commerce Department on Tuesday provided a tailwind to data on the labor market and consumer spending, suggesting the economy remained strong last quarter.
The strong economy is unlikely to affect expectations that the US Federal Reserve will cut interest rates again next month. However, this strengthened the view that the US central bank does not need to pursue another 0.5 percentage point cut in interest rates.
“The report says net trade supported GDP growth in August,” said Carl Weinberg, chief economist at High Frequency Economics. “Taken together, July and August figures suggest that net trade has been flat so far in the third quarter and has not added or subtracted significantly from GDP growth so far.” Trade The gap narrowed 10.8% to $70.4 billion, the smallest in five months compared to the same period last year. The Commerce Department’s Bureau of Economic Analysis announced a revised $78.9 billion in July.
Economists polled by Reuters had expected the trade deficit to narrow to $70.6 billion from the previous estimate of $78.8 billion in July.
Exports increased by 2.0% to a record high of $271.8 billion. Merchandise exports rose 2.5% to $179.4 billion, the highest level since September 2022. A record $1.7 billion increase in capital goods boosted exports, mainly reflecting telecommunications equipment, commercial aircraft, computer accessories and other industrial machinery.
However, semiconductor exports decreased.
Exports of consumer goods increased by $1 billion thanks to pharmaceuticals. A $1.1 billion decline in crude oil was more than offset by a $1.5 billion rise in non-monetary gold, leading to increased exports of industrial supplies and materials.
Exports of automobiles, parts, and engines increased, driven by exports of passenger cars. Non-oil exports, like other products, reached record highs.
Services exports increased by $900 million to a record $92.3 billion, driven by increases in travel and government goods and services. However, exports of transport services declined.
Imports decreased by 0.9% to $342.2 billion. Merchandise imports decreased by 1.4% to $274.3 billion. This was held down by a $3.9 billion decline in industrial supplies and materials and a $1.2 billion decline in non-monetary gold.
Crude oil imports decreased by $1 billion. Imports of automobiles, parts and engines fell by $1.3 billion, weighing on passenger cars. However, imports of other goods were at the highest level since December 2021. Imports of goods have surged in recent months, likely as companies rush to ship in anticipation of higher tariffs and last week’s strike by longshoremen, which lasted just three days. .
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Imports of services rose by $700 million to a record $67.9 billion, driven by increases in travel and intellectual property fees. However, imports of transport services decreased.
After adjusting for inflation, the trade deficit in goods fell by 8.9% to $88.6 billion. The average so-called physical trade deficit for July and August is roughly equal to the average for the second quarter.
Trade value has declined from gross domestic product for the second consecutive quarter. Growth forecast for the third quarter currently stands at 3.2% annualized. The economic growth rate for the April-June period was 3.0%.
(Reporting by Lucia Muticani; Editing by Andrew Heavens and Nick Zieminski)
