US trade deficit widened by less than expected in July

The US trade deficit widened in July by less than forecast, reflecting an increase in exports of cars and services. 

The shortfall in goods and services trade grew to $65 billion from a revised $63.7 billion in the prior month, Commerce Department data showed Wednesday. The figures aren’t adjusted for inflation. The median estimate in a Bloomberg survey of economists called for a $68 billion deficit.

The value of exports rose 1.6%, while imports increased 1.7%. Exports of industrial supplies and autos increased in the month. The advance in imports reflected a rise in consumer goods — largely cell phones and household goods — as well as capital equipment.

Resilient household demand — illustrated recently by robust retail sales — is encouraging merchants to boost orders with foreign suppliers. Imports may climb further in coming months as retailers prepare for the holiday-shopping season.

Despite the monthly advance, exports are down 3.5% from a year earlier, constrained by tepid overseas demand. The data will help shape estimates for third-quarter gross domestic product. The government’s latest growth estimate showed net exports weighed on second-quarter GDP for the first time since early 2022.

On an inflation-adjusted basis, the merchandise trade deficit widened to $88.4 billion in July.

Digging Deeper

• Travel exports — or spending by visitors to the US — increased 3.6% to the highest since the end of 2019
• Travel imports — a measure of Americans traveling abroad — rose to for the first time since February
• The US merchandise-trade deficit with China widened 5.4% to $24 billion