US trade deficit narrows in July

 THE US trade deficit shrank for a fourth straight month in July, reflecting a decline in the value of imports and a slight pickup in exports that are seen helping provide a lift to third-quarter economic growth.

The gap narrowed by 12.6 per cent from a month earlier to US$70.65 billion, the smallest since October, Commerce Department data showed Wednesday (Sep 7). The median estimate in a Bloomberg survey of economists called for the deficit to narrow to US$70.2 billion. The figures aren’t adjusted for inflation.

The value of goods and services exports increased 0.2 per cent to a record US$259.3 billion while imports declined 2.9 per cent to a five-month low of nearly US$330 billion.

Inbound shipments of consumer goods plummeted 9.8 per cent, the most in data back to 1992. US retailers are likely dialing back orders with overseas suppliers as they focus on getting inventories more in line with sales. 

Rapidly rising prices are weighing on domestic demand, limiting Americans’ wherewithal to spend. The leftover income is increasingly being spent on services and experiences in the wake of a pandemic-fuelled boom in outlays on merchandise. 

On an inflation-adjusted basis, the July merchandise trade deficit shrank to US$103.4 billion, the smallest since October. BLOOMBERG