Trade Deficit Worsens 13% for July

The U.S. international trade deficit worsened in July, according to a Commerce Department report (link opens in PDF) released today. 

The total deficit expanded 13%, to $39.1 billion, almost matching analyst expectations of a $39 billion deficit. June's number had been at a four-year low. 

Two things worsen a deficit: (1) imports go up (2) exports go down. Imports increasing is generally favored over exports decreasing, as exports are more directly linked to signs of an internally strengthening economy. July's results show a bit of both, where a $1.1 billion dip in exports to $189.4 billion was paired with July's $3.5 billion boost in imports to $228.6 billion. 

Source: census.gov.   

The services surplus remained relatively steady, falling $100 million to $19.4 billion.The goods deficit increased $4.5 billion from June to $58.6 billion.

The $1.1 billion drop in exports came entirely from goods, led by decreases in capital goods (-$1.6 billion) and consumer goods (-$1.4 billion), and partially offset by a $1.7 billion boost in industrial supplies exports.

However, even as exports picked up for industrial supplies, they also accounted for the largest increase in imports ($2.0 billion), followed by a $0.8 billion increase in vehicles and parts.

The U.S. currently enjoys its largest trade surplus for goods with Hong Kong ($2.9 billion), while a $30.1 billion China deficit -- an all-time high -- keeps the balance of trade in the red.

Europe's weak economy also is weighing on U.S. exports. The deficit with the 27-nation European Union jumped to a record $13.9 billion as imports from that region climbed 17.2% to a record $35.1 billion while U.S. exports to the region fell 7.4% to $21.1 billion.

-- Material from The Associated Press was used in this report.

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