US trade deficit shrinks by record

Numbers: The US trade deficit narrowed 4.3% in July and fell to a record low due to the largest increase in exports in four months.

The trade gap has slipped to $ 70.1 billion from an all-time high of $ 73.2 billion the previous month, the government said Thursday.

Big picture: The US trade deficit is at a record pace this year. The economy has recovered more strongly relative to other countries, allowing Americans to buy more imports such as Japanese cars, Chinese-made iPhones or French wine.

Levels of U.S. imports exceeded pre-pandemic levels in March and continued to reach new highs.

Exports have recovered at a slower pace and have not yet returned to pre-pandemic levels. The economies of other countries have still not caught up with the United States

The trade gap is likely to narrow over the next year as other countries recover and seek more US-made products, but high US international trade deficits have persisted for decades and no longer exist. not disappear.

Read: Consumer confidence drops to 6-month low amid Delta anxiety and inflation

Also: Inflation in the United States hits its highest level in 30 years

Key details: Exports rose 1.3% to $ 212.8 billion, but they were still slightly below pre-pandemic levels. The United States shipped more machinery, automobiles and auto parts to other countries

Imports fell 0.2% to $ 282.9 billion. The United States imported fewer cell phones, consumer electronics and industrial supplies. Auto imports, however, increased.

U.S. businesses ordered more consumer imports earlier than usual to ensure they had enough inventory for the holiday shopping season at the end of the year. It is possible that they are starting to reduce now.

The merchandise trade gap with China, meanwhile, has grown from $ 27 billion to $ 25 billion. However, the deficit with China is on track to exceed 2020 levels.

Market reaction: The American stock exchange DJIA,
+ 0.33%

SPX,
+ 0.33%
rose in action from Thursday morning. The trade report generally has little impact on the financial markets.

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