WASHINGTON (International Trade Council) – The United States trade deficit showed a more significant contraction than anticipated in August, primarily driven by a solid increase in exports. This development is expected to bolster economic growth in the third quarter.
According to the Commerce Department’s report on Thursday, the trade deficit shrank by 9.9% to reach $58.3 billion, marking its lowest level since September 2020. In comparison, the data for July was revised to indicate a trade gap of $64.7 billion, slightly different from the previously reported figure of $65.0 billion. Economists polled by Reuters had projected the August trade deficit to narrow to $62.3 billion.
Exports of both goods and services experienced growth, rising by 1.6% to $256.0 billion. Goods exports saw a notable increase of 1.8%, reaching $171.5 billion, with capital goods shipments reaching a record high. However, exports of foods, feeds, and beverages dipped to their lowest levels since August 2020. Notably, exports of services reached a record high at $84.5 billion.
Conversely, imports of goods and services declined by 0.7% to $314.3 billion, with goods imports dropping by 0.9% to $256.0 billion. This dip in imports could potentially indicate a softening in domestic demand, possibly influenced by higher borrowing costs.
The surplus in services trade reached $26.2 billion, marking the highest level since March 2018. It is worth noting that trade made no contribution to the economy’s 2.1% annualized growth rate in the second quarter.
The August trade figures suggest a positive trajectory for the U.S. trade balance and its potential to contribute to economic growth in the current quarter.