Highlights
In August, the U.S. trade balance worsened and partially for the worst reason-exports declined, likely reflecting economic weakness in Europe and slower growth in Asia. Also, oil and petroleum product imports jumped on higher prices. The trade deficit expanded to $44.2 billion from $42.5 billion in July (originally $42.0 billion). This compares to market expectations of a trade gap of $44.0 billion. Exports fell 1.0 percent, following a 1.1 percent decrease in July. Imports slipped 0.1 percent after a 0.6 percent dip the prior month.

The widening in the trade gap was led by the petroleum deficit which increased to $23.5 billion in August from $21.0 billion the month before. The non-petroleum goods shortfall narrowed to $35.3 billion from $36.3 billion in July. The services surplus slipped to $15.1 billion from $15.4 billion in July.

On a not seasonally adjusted basis, the August figures showed surpluses, in billions of dollars, with Hong Kong $2.1 ($1.8 for July), Australia $1.8 ($2.1), Singapore $0.9 ($0.7), and Egypt $0.2 ($0.2) among others. Deficits were recorded, in billions of dollars, with China $28.7 ($29.4), European Union $11.7 ($12.0), OPEC $8.1 ($8.4), Japan $6.7 ($6.8), Germany $5.7 ($4.9), Mexico $4.5 ($5.0), Canada $2.4 ($2.1), Ireland $2.4 ($2.6), and Venezuela $2.2 ($1.4) among others.

The decline in exports was again was led by a decline in industrial supplies but exports of nonmonetary gold rose modestly. Foods, feeds & beverages also posted a notable decrease with minor slippage seen in autos and consumer goods. Capital goods excluding autos posted a modest gain.

Higher oil prices led the boost in imports but businesses appear to be concerned about consumer demand later this year as consumer goods declined. Industrial supplies jumped $1.5 billion with oil and petroleum products playing a key role. Businesses are remaining cautious about equipment investment as capital goods excluding autos slipped again. But a key concern likely is that imports of consumer goods declined, possibly indicating that businesses continue to worry about demand.

The latest report continues to suggest that global trade is shrinking somewhat. This suggests soft economic growth ahead for the U.S. and other countries. However, there is potential for improvement in domestic demand in the U.S. after an unexpectedly sharp decline in initial jobless claims.

Market Consensus before announcement
The U.S. international trade gap in July edged up but much less than expected-largely on a downward revision to June and a July narrowing in the petroleum deficit. The trade deficit widened slightly to $42.0 billion from $41.9 billion in June. But global trade shrank in the latest report. Exports declined 1.0 percent, following a 1.2 percent boost in June. Imports shrank 0.8 percent after a 1.5 percent fall in June. The slight increase in the trade gap was led by the non-petroleum goods gap which expanded to $35.8 billion from $34.2 billion in June. The petroleum deficit decreased to $20.9 billion in July from $22.5 billion the month before. The services surplus eased to $15.3 billion from $15.5 billion in June.

2012 Released Schedule

Released On: 1/9 2/6 3/5 4/8 5/6 6/4 7/7 8/5 9/7 10/7 11/4 12/7 Release For: Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct