US trade deficit swelled to biggest since 2008 in July

[WASHINGTON] The US trade deficit swelled to the widest in 12 years in July, with the surplus on services plunging to the lowest since 2012, pointing to a bumpy economic recovery ahead.

The overall gap of goods and services expanded to US$63.6 billion in July from a revised US$53.5 billion in June, according to Commerce Department data released Thursday. The median estimate of economists surveyed by Bloomberg had called for a widening to US$58 billion. The positive balance on services declined for the first time in three months, dropping to US$17.4 billion.

Exports increased from the prior month by 8.1 per cent to US$168.1 billion, while imports gained 10.9 per cent to US$231.7 billion, the department said. Together, the value of US exports and imports rose to US$399.8 billion, still well below pre-pandemic levels.

The widening in the trade deficit in July after narrowing the prior month shows that the US economic recovery will come in fits and starts. Trade volumes are higher than May's pandemic lows, but remain depressed following the initial uptick stemming from reopening measures.

The increase in imports of services outpaced the advance in exports, resulting in a lower surplus. Travel exports declined for a fifth straight month and are three-quarters smaller than a year earlier. Imports ranging from insurance and financial services to construction and travel rose, contributing to an overall increase to US$35.3 billion, the highest since February.

BLOOMBERG