The U.S. Census Bureau and the Bureau of Economic Analysis reported this morning that the U.S. trade deficit for July totaled $42 billion, up from $41.9 billion in June. U.S. exports fell from $185.2 billion in June to $183.3 billion in July, a difference of $1.9 billion. U.S. imports also fell, from $227.1 billion to $225.3 billion, a drop of $1.8 billion. Only the June 2012 trade deficit has been lower in the past 18 months.
The small increase was significantly better than the consensus estimate for growth in the deficit to $44 billion.
U.S. exports to Europe fell 11.7%, and the trade deficit with Europe rose to $12 billion in August from $8.4 billion in July. The deficit with China rose to $29.4 billion from $27.4 billion in July. The U.S. enjoyed trade surpluses with Australia ($2.1 billion) and Hong Kong ($1.8 billion), among others. Lower crude oil prices also helped keep the trade deficit lower.
The largest drop in exports came in industrial supplies and materials ($2.4 billion). No other category fell by at least $1 billion. The largest increase in exports came in foods, feed and beverages ($1.8 billion) and capital goods ($0.1 billion).
Imports fell the most in industrial supplies and materials ($2.1 billion) and capital goods ($0.6 billion). Imports increased in automotive vehicles, parts and engines ($0.5 billion) and consumer goods ($0.4 billion).
The drop in both exports and imports indicates just how weak the global and domestic economy is currently. That a slow-motion economy gets the credit for keeping the trade deficit in check is not really such good news.