Trade Deficit Widens, Exports Rise

The nation's trade deficit widened by $1.2 billion in August to $40.7 but details are positive. Exports of capital goods, excluding aircraft, actually rose slightly to $37.6 billion while imports of capital goods were up $1.2 billion to $50.2 billion. These results hint at badly needed strength for cross-border business investment. When including aircraft, however, capital goods exports fell $0.7 billion in what is the lowest result in nearly 5 years.

Total exports in August rose 0.8 percent, which is another positive, while imports rose 1.2 percent. The gain for imports is a subtraction in the national accounts but it does point to solid domestic demand, specifically once again for capital goods. The trade gap for goods is unchanged from July at $60.3 billion while the trade surplus for the nation's services, in what is a superficial negative in the report, fell $1.2 billion to $19.6 billion for the lowest showing since December 2013. But the dip in services reflects $1.2 billion in broadcast payments for the Olympics.

By countries, the gap with China widened by $3.6 billion to $33.9 billion while the gap with the European Union widened by $1.6 billion to $13.9 billion. The gap with Japan edged lower to $6.0 billion.

Today's results may lower third-quarter GDP estimates but the export reading excluding aircraft is a subtle positive for the economic outlook.

Recent History Of This Indicator:
The nation's trade deficit is expected to narrow slightly in August, to a consensus $39.0 billion vs July's $39.5 billion. Advanced trade data on August goods showed a 0.7 percent increase in exports and only a 0.3 percent increase in imports.