In August, the United States saw its trade deficit shrink to its lowest level in nearly three years, surpassing expectations and potentially bolstering economic growth in the third quarter.
According to the Commerce Department, the trade deficit contracted by 9.9% to $58.3 billion, marking the lowest figure since September 2020. July’s data was also revised, showing a trade gap of $64.7 billion, slightly different from the previously reported $65.0 billion. Economists surveyed by Reuters had anticipated a smaller reduction in the trade deficit, expecting it to reach $62.3 billion in August.
This positive shift was primarily driven by a robust increase in exports of goods and services, which rose by 1.6% to $256.0 billion. Specifically, goods exports surged by 1.8% to $171.5 billion, with capital goods exports reaching a record high. However, exports of foods, feeds, and beverages were at their lowest point since August 2020. On the services front, exports hit a record high at $84.5 billion.
On the flip side, imports of goods and services decreased by 0.7% to $314.3 billion in August, with goods imports falling by 0.9% to $256.0 billion. This could be indicative of a potential slowdown in domestic demand, possibly influenced by rising borrowing costs.
Notably, the services surplus reached $26.2 billion, the highest level since March 2018. In the second quarter, trade didn’t contribute significantly to the economy’s annualized growth rate of 2.1%.