September 6, 2017 – The International Trade Balance looks at the U.S. Economy’s transactions with trading partners around the world for goods, services, income, and financial claims on liabilities. It is the major indicator for foreign trade and has implications for the net exports portion of GDP. A positive trade balance represents more exports than imports while the opposite is true for a negative balance.
The trade deficit in July widened to $43.7 billion, from June’s revised deficit of $43.5 billion (+0.1 billion revision). The deficit came in below the consensus of $44.6 billion. Exports dropped 0.3% to $194.4 billion while imports came in 0.2% lower at $238.1 billion. Despite the drop in exports, there was still a $1.1 billion increase in aircraft and a $0.4 billion increase for food products. Services fell 0.8% to $21.6 billion in July.
The slight increase in July’s trade deficit indicates weaker demand for U.S. goods and a stronger demand for foreign goods. Over time, decreases in exports can be translated into lower corporate profits and a decrease to the stock market. A decrease in imports could be attributed to increasing prices or foreign goods, a weaker dollar, or demand for domestic goods has increased.