Worse Than Expected US Trade Deficit Spikes In July, Trade Gaps With China, EU Rise To Record
When last week the revised Q2 GDP print was announced, which beat expectations solidly driven entirely by a surge in net exports, we said that "with China on the rocks and tightening, the Emerging Markets in free fall, and Europe still a net exporter (so not benefiting the US), anyone hoping this trade led-recovery will be sustainable, will be disappointed." Sure enough, the first trade data update for the third quarter as of July, confirmed just this, as the trade deficit widenedfrom a revised $34.5 billion deficit, to a substantially larger monthly deficit, amounting to $39.1 billion. This was $500MM more than consensus expected, or $38.6 billion, and it means that as we predicted, the downward revisions to Q3 tracking estimates are about to start rolling in, trimming ~0.1%-0.2% from US GDP for this current quarter. Specifically, imports for the month rose from $225.1 billion to $228.6 billion while exports fell from $190.5 billion to $189.5 billion. But perhaps most notable is that in July, the US trade deficit with China and the EU rose to a record of $30.1 billion (from $26.6bn last month) and $13.9 billion (from $7.1bn) respectively.
The detailed breakdown:
In July, the goods deficit increased $4.5 billion from June to $58.6 billion, and the services surplus decreased $0.1 billion from June to $19.4 billion. Exports of goods decreased $1.1 billion to $132.7 billion, and imports of goods increased $3.4 billion to $191.3 billion. Exports of services were virtually unchanged at $56.7 billion, and imports of services increased $0.1 billion to $37.3 billion.
The goods and services deficit decreased $4.3 billion from July 2012 to July 2013. Exports were up $6.1 billion, or 3.3 percent, and imports were up $1.8 billion, or 0.8 percent.
The June to July decrease in exports of goods reflected decreases in capital goods ($1.6 billion); consumer goods ($1.4 billion); other goods ($0.3 billion); and automotive vehicles, parts, and engines ($0.2 billion). Increases occurred in industrial supplies and materials ($1.7 billion) and foods, feeds, and beverages ($0.4 billion).
The June to July increase in imports of goods reflected increases in industrial supplies and materials ($2.0 billion); automotive vehicles, parts, and engines ($0.8 billion); consumer goods ($0.7 billion); other goods ($0.3 billion); and foods, feeds, and beverages ($0.1 billion). A decrease occurred in capital goods ($0.3 billion).
Broken down by trade partners:
The July figures show surpluses, in billions of dollars, with Hong Kong $2.9 ($3.4 for June), Brazil $1.7 ($1.6), Australia $1.5 ($1.7), and Singapore $0.6 ($1.2). Deficits were recorded, in billions of dollars, with China $30.1 ($26.6), European Union $13.9 ($7.1), OPEC $7.4 ($5.8), Japan $6.8 ($5.5), Germany $6.4 ($4.9), Mexico $4.1 ($4.8), Saudi Arabia $3.3 ($3.0), Canada $2.8 ($1.8), Venezuela $2.3 ($1.2), Ireland $2.3 ($1.4), Korea $2.2 ($1.6), and India $2.1 ($1.0).
A look at crude oil imports showed that July saw a spike in both total barrels imports and berrls per day, which rose to the highest of 2013, at 264.2MM barrels and 8,523K barrels per day.
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