Each month’s reading on international trade in goods is one of the preliminary reports for what the rest of us refer to as the trade deficit, which will be released next week. Now we have the August trade report in goods, showing that the deficit in goods fell slightly to $58.4 billion in August. What stands out here is that the Bloomberg consensus estimate was for a $62.3 billion deficit, and the Econday range was $64.0 billion to $59.2 billion.
Exports rose by some 0.7% in August. The areas of strength were in consumer goods, industrial supplies and vehicles. This gain occurred even considering a −3.5% reading in food exports as food deflation continues to persist.
While exports were up, imports were also up in August, rising by 0.3%. The areas of growth in imports were in capital goods and food.
Exports of goods for August were $124.6 billion, $0.9 billion more than July exports. Imports of goods for August were $183.0 billion, $0.5 billion more than July imports. Wholesale inventories for August were estimated at an end-of-month level of $589.3 billion on a seasonally adjusted basis, down 0.1% from the July 2016 reading and virtually unchanged from August 2015.
It has been a trend for decades that the trade data have been negative. Still, the gain in exports of goods should be viewed as positive when considering that the U.S. dollar has remained stronger than many U.S. companies would prefer. As a reminder, a stronger dollar makes it cheaper to import. A stronger dollar also makes our goods and services we try to export cost the foreign buyers more in their local currencies.
This should help economists look for a slightly stronger overall reading of international trade, which will be released on Wednesday, October 5.