US trade deficit expanded in August

US trade deficit expanded in August due to the growth in imports (including oil) is higher than that of exports. The trade deficit expanded by 3% MoM to a seasonally adjusted value of 40.73 billion USD. The imports increased by 1.2%, while exports rose weaker by only 0.8%. The economists expected deficit to amount 39.2 billion USD in August and markets were highly disappointed.

The growth in imports amounted to 2.6 billion USD, from which 1.2 billion USD come from payments for use of intellectual property – namely the broadcast of the summer Olympics in Rio. Imports of crude oil (by volume) reached its highest level since January 2014.

Overall, the latest data suggest that international trading activity moderately improved. In the last year, the trade was reflected negatively on economic growth in USA. The strong dollar and shrinking economies in Europe hinder the US companies to increase sales abroad. The stable domestic consumption is a good market for international imports, which in turn reduces the US gross domestic product (GDP). In the first half of 2016, the trade provides a modest contribution to GDP growth, but the pace of expansion still remains low at around 1% annual growth rate. Since the end of the recession in 2009, the US economy grew by an average of 2.1% annually.

In the first eight months of the year trade deficit decreased by 1.3%. Imports recorded a decrease of 3.6% compared to the same period last year, while exports decreased by 4.1%. 

In August, imports of services, including the rights to broadcast the Olympics, reaching its highest level ever. Imports of crude oil in dollars grew on month-on-month basis, according to seasonally adjusted data, but declined on year-on-year basis. The volume of imported raw material per day was 8.3 million barrels per day in August, while during the same period last year the amount was 7.1 million barrels per day.

Export growth reflects deliveries of non-monetary gold (gold that is not stored as a reserve asset by the authorities) and automobiles and auto parts. The exports of capital goods, however, is the lowest level since September 2011. Exports of soybeans increased slightly after jump in July. Good harvest of soybeans in the United States, the shortage of grain in South America and stable demand (especially from China), gave impetus to the export of soybeans.

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