Petroleum and industrial supplies drive July’s $103 billion gap, suggesting strong demand in a resilient economy.
The U.S. goods trade deficit widened sharply in July as imports of oil and industrial supplies soared, signaling firm domestic demand in an economy where manufacturers and consumers appear to be drawing heavily on fuel, chemicals, and raw materials to keep activity humming.
The trade gap in goods jumped 22 percent to $103.6 billion from $84.9 billion in June, the Commerce Department reported on Aug. 29. Economists polled by Reuters had expected the deficit to reach $89.5 billion, making the blowout a major upside surprise.
Imports of industrial supplies—including petroleum—rose more than 25 percent, while capital goods climbed 4.8 percent, consumer goods 2.1 percent, and “other goods,” a catch-all category, 11.5 percent. Exports were little changed.
Part of the import surge may reflect robust domestic demand. Some could also be due to stockpiling ahead of President Donald Trump’s early August deadline for new country-specific tariffs, a pattern seen in previous months as importers front-ran expected duties. A similar rush helped drive the overall U.S. trade gap, including services, to a record $140.5 billion in March.
The import surge aligns with recent signs of economic resilience. U.S. manufacturing activity hit a 39-month high in August on stronger domestic and export orders. Consumer spending, which accounts for more than two-thirds of economic activity, increased 0.5 percent in July, the biggest gain in four months, after a 0.4 percent rise in June.
Motor vehicle purchases led the advance, lifting durable goods outlays by 1.9 percent, with additional gains in recreational goods, clothing, furnishings, and household equipment. Some categories softened, however. Spending at restaurants and bars as well as on hotels fell, reflecting what some analysts say is greater consumer caution.
“A consumer that is cutting back on going out to eat and not booking as many hotel stays may not signal disaster, but it does point to the sort of budgeting decisions that households make when under pressure,” said Tim Quinlan, a senior economist at Wells Fargo.
By Tom Ozimek
