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US goods trade deficit rises as exports fall
[WASHINGTON] The US goods trade deficit widened sharply in July as exports of agricultural products tumbled, suggesting trade will likely be a drag on economic growth in the third quarter.
The Commerce Department said on Tuesday the goods trade gap surged 6.3 per cent to US$72.2 billion last month. Exports of goods dropped 1.7 per cent to US$140.0 billion, weighed down by a 6.7 per cent plunge in shipments of food, feeds and beverages.
That likely reflected a continued reversal of soybean exports after farmers front-loaded shipments of the crop in April and May to China before Beijing's retaliatory tariffs came into effect in early July. The United States and China are embroiled in a trade war marked by tit-for-tat tariffs.
Last month, there were also decreases in exports of capital and consumer goods, though motor vehicle exports rose. Imports of goods increased 0.9 per cent to US$212.2 billion in July, boosted by imports of food, industrial supplies and capital goods.
There were also increases in motor vehicle imports, but imports of consumer goods fell.
The US government reported last month that trade contributed 1.06 percentage points to the economy's 4.1 per cent annualized growth pace in the second quarter.
Despite the anticipated drag from trade, economic growth in the July-September quarter is still likely to remain solid.
The Commerce Department also reported on Tuesday that wholesale inventories jumped 0.7 per cent in July and stocks at retailers increased 0.4 per cent, suggesting inventories could provide a boost to gross domestic product this quarter.
There was an outright inventory liquidation in the second quarter. As a result inventories subtracted a full percentage point from GDP growth in the April-June quarter.