US trade deficit swelled to biggest since 2008 in July

The U.S. 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 $63.6 billion in July from a revised $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 $58 billion. The positive balance on services declined for the first time in three months, dropping to $17.4 billion.

Exports increased from the prior month by 8.1% to $168.1 billion, while imports gained 10.9% to $231.7 billion, the department said. Together, the value of U.S. exports and imports rose to $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 U.S.’s 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—which refer to tourists to the U.S.—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 $35.3 billion, the highest since February.

Imports and exports of goods increased, led by automotives in both categories. Outgoing shipments of auto vehicles, parts and engines surged 46% from the previous month, while imports climbed 41%, with both almost reaching levels last seen before the outbreak of the coronavirus pandemic.