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The U.S. trade deficit narrowed in July from a record a month earlier, partly reflecting fewer imports of consumer goods tied in part to lingering supply problems and a shift in household spending toward services.
The gap in trade of goods and services shrank 4.3% to $70.1 billion, from a revised $73.2 billion in June, according to Commerce Department data released Thursday. The median estimate in a Bloomberg survey of economists was for a shortfall of $70.9 billion.
The value of goods and services imports decreased 0.2% to $282.9 billion in July. Exports climbed 1.3% to $212.8 billion, the highest since 2019.
While a surge in household demand for merchandise earlier this year and steady business demand for equipment has left inventories extremely lean, the reopening of the economy is gradually boosting demand for services.
At the same time, domestic producers have struggled to ramp up output because logistics bottlenecks have knocked global supply chains out of sync, resulting in backups at ports, a wide range of materials shortages, and soaring shipping rates.
Digging Deeper
- The merchandise trade deficit narrowed to $87.7 billion from a record in June
- The nation's surplus in services trade decreased to $17.7 billion, the smallest since August 2012
- U.S. merchandise exports climbed to a fresh record of $148.6 billion, driven by an increase in shipments of capital equipment, consumer goods and automobiles
- The value of motor vehicles and parts imports rose by $1 billion to $29.6 billion
- The value of petroleum imports climbed to $17.8 billion, the highest since May 2019
- On an inflation-adjusted basis, the July merchandise trade deficit decreased to a three-month low of $100.1 billion
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