US Trade Deficit Widened by Less than Expected in July

Trade Shortfall Grew to $65 Billion, Median Estimate Was $68 Billion
Cargo ship in New Jersey
A cargo ship moves under the Bayonne Bridge as it heads into port in Bayonne, N.J. (Spencer Platt/Getty Images via Bloomberg News)

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The U.S. 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 Sept. 6. 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 cellphones 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.

Chart of US trade deficit

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.

Travel exports — or spending by visitors to the U.S. — increased 3.6% to the highest since the end of 2019. The U.S. merchandise-trade deficit with China widened 5.4% to $24 billion.

— With assistance from Jordan Yadoo.

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