(Bloomberg) — The U.S.’s deficit in merchandise trade swelled to the second-largest on record last month as imports climbed to pre-pandemic levels, buoyed by demand for automotives.
The overall deficit grew to $79.3 billion in July from a revised $71 billion in June, according to Commerce Department data released Friday. The median projection in a Bloomberg survey of economists called for a $72 billion shortfall in July, and the reading was bigger than all except one of 37 estimates. The biggest gap was recorded in December 2018, at $79.5 billion.
Exports increased 11.8% from June to $115 billion, the highest since March. Imports rose by the same measure to $194.3 billion, it said. That was the most since February.
The monthly gain in exports was led by a 44% surge in automotive-vehicle shipments. Industrial supplies, such as oil, rose 7.1% and capital goods, which include factory machinery and parts, jumped 7.5%. Foods, beverages, and animal feed were up 2.1% from June. Overall, exports are 15.9% are lower than a year earlier.
“Global and U.S. demand continue to face a long and risky path towards recovery, so we see trade struggling to continue to regain ground quickly,” James Watson and Gregory Daco, economists at Oxford Economics, wrote in a note.
While the total value of U.S. two-way trade picked up to $309.3 billion from $276.7 billion in June, the number is still well below pre-pandemic levels as the world struggles to recover from the coronavirus crisis. That said, American exporters may be benefiting from a decline in the value of the dollar, which makes U.S. goods more competitive in overseas markets.
On the imports side, industrial supplies gained 10.7% from a month earlier. Capital goods, cars, and consumer merchandise all increased. Imports are still 7.6% lower than July 2019.
The report also showed that wholesale stockpiles fell 0.1% during the month, while retail inventories gained 1.2%. Both provide an indication of what companies expect consumer and business demand for products will be in months to come.
(Updates with comment from economists in fifth paragraph.)
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