US trade deficit jumps in August as exports fall

The US trade deficit jumped in August as exports tumbled amid a slowing global economy, outweighing an increase in imports, government data released Tuesday showed.

The Commerce Department said the trade gap widened to $48.3 billion in August, an increase of 15.6 percent from July.

The deterioration in the US trade balance, the worst since March, spells bad news for US economic growth. While consumer spending has been solid if not spectacular, the data gave further evidence of the pressure on exports from the slowdown in China and other major US trading partners and the stronger dollar, which makes exports less competitive.

"We look for net foreign trade to subtract a hefty three-quarters of a percentage point from Q3 annualized GDP growth," said Ian Shepherdson of Pantheon Macroeconomics.

The August deficit was much larger than expected; the consensus estimate was a 6.4 percent rise to $44.5 billion.

Exports fell 2.0 percent to $185.1 billion in the month. Goods exports sank to their lowest level since June 2011, and industrial supplies and materials fell to their weakest level since October 2010.

Exports of plastic, cotton, electronic equipment and computers were all weaker. Civilian aircraft exports, however, soared.

Imports rebounded from a July decline, rising 1.2 percent to $233.4 billion as imports of consumer goods led the way. Mobile phone imports leaped 30 percent. Auto imports slipped 1.3 percent to $29.7 billion after hitting a record in July.

Reflecting the boom in US oil production and falling oil prices, the United States further reduced imports of petroleum products, to $15.1 billion, the lowest level since September 2004. Imports from the OPEC oil cartel plummeted 24.7 percent to $4.9 billion.

Compared with a year ago, the US trade deficit grew 5.2 percent to $354.4 billion, with exports down 3.8 percent and imports rising 2.2 percent.

In unadjusted goods trade data, the gap with China, by far the largest shortfall of US trade partners, widened sharply, to $32.9 billion in August from $28.8 billion in July. China's surprise currency devaluation in mid-August pared lowered the yuan against the dollar by almost four percent.

With NAFTA partner Mexico, the deficit leaped almost 55 percent to $5.3 billion as exports slide.

The gap with the European Union increased 9.0 percent to $14.5 billion.

Robert Brusca, chief economist at FAO Economics, pointed to a sharp difference between the US export market and the US domestic market, with exports generally falling over the past three months while imports were rising in all categories.

"Consumer goods exports are quite weak while consumer goods imports are quite strong and have accelerated," he said.

"Improved US growth and expectations of improvement are one set of reasons for stepped-up imports. Another is the rising the dollar that has made imports so much cheaper."