US trade deficit in goods and services narrows to the lowest level in five months
The US trade deficit in August narrowed to the lowest level in five months, mainly driven by the expansion of the services trade surplus and the rebound in commodity exports. According to data from the US Department of Commerce, the trade deficit shrank by 10.8% from the previous month to $70.4 billion, with exports growing by 2%, the largest increase since February, and imports decreasing by 0.9%. Although trade had the biggest impact on GDP in the second quarter, the latest data shows a slight weakening in the net export impact. Adjusted for inflation, the goods trade deficit in August was $88.6 billion, the smallest since February
According to the VESYNC Financial APP, driven by the expansion of service trade surplus and the rebound in commodity exports, the US trade deficit narrowed to its lowest level in 5 months in August. Data released by the US Department of Commerce on Tuesday showed that the goods and services trade deficit shrank by 10.8% from the previous month to $70.4 billion. The $8.5 billion narrowing in August was the largest since March 2023. This latest data is in line with the median estimate in a survey of economists by Bloomberg.
The data indicates that exports increased by 2%, the largest increase since February, while imports decreased by 0.9%, without adjusting for inflation.
The reason for the decline in imports is a significant decrease in industrial supplies imports, largely due to the drop in crude oil prices that month. The slight increase in consumer goods inbound shipments may reflect US retailers increasing overseas orders before disruptions caused by strikes at major US port terminals. The three-day strike ended last week to allow for more negotiations before January 15.
US commodity exports saw a significant increase due to higher shipments of capital goods and motor vehicles.
Although the impact of goods and services trade on the US Gross Domestic Product (GDP) in the second quarter was the largest since early 2022, the latest net export data shows a slight weakening of the impact.
After adjusting for inflation, the August goods trade deficit narrowed to $88.6 billion, the smallest deficit since February.
The survey results from the Institute for Supply Management (ISM) showed mixed trade conditions in August. The organization's US manufacturing export index contracted, while overseas business for service providers grew