The August monthly U.S. trade figures released by the Census Bureau this morning presented a mixed picture. The combined U.S. goods and services trade deficit edged down from July’s level, exports hit an all-time high, and the manufacturing and China shortfalls retreated from their record monthly levels. Yet the headline trade gap and many key individual deficits are up on a yearly basis — meaning that America’s trade flows continue to slow both the already weak recovery and job creation on net.
The overall U.S. trade deficit dipped by 0.52 percent in August, from a downwardly revised $40.32 billion to $40.11 billion. This fourth straight monthly improvement included not only a record U.S. export total but a new record for petroleum exports. Year on year, however, the situation was considerably different.
Despite the monthly decrease, the overall deficit is now up 4.21 percent on a January-August basis over last year’s total – from $321.68 billion to $335.22 billion. The U.S. manufacturing deficit and its China goods trade shortfall also declined from the record levels they hit in July – $67.33 billion and $30.86 billion, respectively. But their decreases (2.16 percent and 12.22 percent respectively), too, were inadequate to prevent both rising year-to-date and threatening to set new annual records.
The January-August manufacturing trade gap is 10.89 percent higher than last year’s comparable figure, when the full year deficit hit the existing record of $646.77 billion. Manufactures exports are up only 1.02 percent year-to-date, while imports have risen by 4.45 percent – more than four times faster.
Similarly, the January-August China goods deficit is 4.08 percent higher than last year’s comparable figure, when the full-year deficit hit the existing record of $318.71 billion. U.S. merchandise exports to the still-rapidly growing Chinese economy have increased by 6.22 percent on a year-to-date basis, but the import flow is so much greater in absolute terms that its 4.64 January-August growth was enough to push the deficit up.
The August goods and services export figure of $198.46 billion represented the nation’s second straight all-time monthly best, topping July’s previous record of $198.03 billion by 0.22 percent. Imports rose in August on month, too, but only by 0.01 percent, to $238.57 billion.
On a January-to-August basis, overall U.S. exports have increased by 3.22 percent – to just under $1.557 trillion. Imports during this period have risen by 3.40 percent, to just over $1.892 trillion.
Consistent with the recent pattern, the monthly narrowing of the trade deficit was dominated by a dramatically improved U.S. performance in energy trade. Between July and August, the combined U.S. trade deficit narrowed by $212m.. But the petroleum deficit – sparked by record monthly exports of just under $14.14 billion – improved by $1.376 billion. The non-oil goods deficit – which is heavily influenced by U.S. trade deals and other trade policies – worsened by $958 million, to $45.13 billion.
One other bright spot in the August trade report: The volatile U.S. deficit in high-tech goods nosedived by nearly 35 percent month-on-month, as U.S. exports rose and imports fell. Further, on a January-to-August basis, this deficit is down 3.06 percent.
America’s merchandise trade deficits with leading trade partners all fell between July and August with the exception of the Mexico shortfall – which rose 1.82 percent to $4.43 billion. The goods trade gap with new free trade partner Korea sank by more than 28 percent, to $1.785 billion, on rising exports and falling imports. But on a monthly basis, this deficit has still surged by 123.40 percent since the bilateral trade agreement came into force in March, 2012.
Surprisingly, the U.S. goods deficit with the troubled Eurozone sank on month by 12.23 percent even though the euro has weakened dramatically versus the dollar recently. Year-to-date, however, this deficit has worsened by 15 percent.