After several months of disappointing trade data which dragged on GDP for the past two quarters, the July trade balance [8]finally was a welcome beat of already low expectations, printing at a deficit of $40.5, better than the $42.4 billion expected, and an improvement from the downward revised deficit of $40.8 billion in July. The deficit declined as exports increased more than imports. The goods deficit decreased $0.2 billion from June to $60.2 billion in July; the services surplus was nearly unchanged from June at $19.6 billion.
[9]
The summary breakdown:
Exports:
- Exports of goods and services increased $1.8 billion in July to $198.0 billion, mostly reflecting an increase in exports of goods. Exports of services also increased.
- The increase in exports of goods was more than accounted for by increases in automotive vehicles, parts, and engines and in industrial supplies and materials. Partly offsetting were decreases in consumer goods and in foods, feeds, and beverages.
- The increase in exports of services reflected increases of less than $0.1 billion in several categories of services.
Imports
- Imports of goods and services increased $1.6 billion in July to $238.6 billion, reflecting an increase in imports of goods. Imports of services were nearly unchanged.
- The increase in imports of goods was mostly accounted for by an increase in automotive vehicles, parts, and engines.
- Imports of services were nearly unchanged as an increase in other business services was mostly offset by a decrease in charges for the use of intellectual property, which decreased due to higher payments in June than in July for the rights to broadcast the 2014 soccer World Cup.
Goods by geographic area (seasonally adjusted, Census basis)
- The goods deficit with the European Union decreased from $11.5 billion in June to $9.5 billion in July. Exports increased $0.5 billion to $24.8 billion, and imports decreased $1.5 billion to $34.3 billion.
- The goods deficit with China decreased from $29.2 billion in June to $27.5 billion in July. Exports increased $0.1 billion to $9.8 billion, and imports decreased $1.6 billion to $37.3 billion.
- The goods deficit with OPEC increased from $3.6 billion in June to $4.9 billion in July. Exports increased $0.3 billion to $6.9 billion, and imports increased $1.5 billion to $11.8 billion.
And yet, even as the deficit contracted, the trade balance excluding the shale revolution, has almost never been worse, as shown in the chart below showing US trade ex crude:
[10]
Expect to see some modest upward revisions to Q2 GDP following today's trade beat.
