Source: Economics Group of Wells Fargo Bank, N.A.
Summary
The U.S. international trade deficit narrowed a sharp $8.5 billion to -$70.4 billion in August. Behind the swing was a 2.0% rise in exports and a 0.9% decline in imports. The pullback in imports suggests net exports will be a neutral factor on the economy’s overall growth in the third quarter.
Two Paths Diverged
The U.S. international trade deficit narrowed $8.5 billion to -$70.4 billion in August (chart). The sharp narrowing brings the overall trade balance closer to where it started the year and marks the largest monthly change since early 2023. Behind the swing was a 2.0% rise in exports and a 0.9% decline in imports. We have written over the past few months that supply chain hurdles, such as shipping delays due to the attacks in the Red Sea and U.S. dockworker strikes, have underpinned strong import flows in the first half of this year. Today’s data show that demand is taking a breather.