US import surge widens July trade deficit

Adam Jeffery | CNBC

The U.S. trade deficit widened slightly more than expected in July as exports dipped, but a rebound in imports pointed to some firming in underlying demand early in the third quarter.

The Commerce Department said on Wednesday the trade gap increased 13.3 percent to $39.1 billion. June's shortfall on the trade balance was revised to $34.5 billion from the previously reported $34.2 billion.

Economists polled by Reuters had expected the trade deficit to rise to $38.7 billion in July.

When adjusted for inflation, the trade gap rose to $47.7 billion from $43.8 billion in June. This measure goes into the calculation of gross domestic product.

Trade's contribution to GDP growth in the second quarter was neutral, but economists expect it to add to growth this quarter and the rise in the so-called real trade deficit is probably not enough to change that view. The economy grew at a 2.5 percent annual rate in the April-June quarter, stepping up from the first-quarter's 1.1 percent pace.

The three-month moving average of the trade deficit, which irons out month-to-to month volatility, decreased to $39.1 billion in the three months to July from $39.3 billion in the prior period.

The increase in imports in July, which reflected rises in industrial supplies, automobiles and consumer goods, suggested some strengthening in domestic demand.

Imports of goods and services rose 1.6 percent to $228.6 billion. Imports of autos, parts and engines were the highest on record in July.

Exports of goods and services dipped 0.6 percent to $189.4 billion in July. However, exports of petroleum products hit a record high.

Weak overseas demand, especially in Europe, has caused an ebb in export growth after trade helped to lift the U.S. economy out of the 2007-09 recession.

In July, exports to the 27-nation European Union fell 7.4 percent resulting in a record trade deficit. Exports to the EU in the first seven months of the year were down 4.4 percent compared to the same period in 2012.

Exports to China fell 4.9 percent. China has been one of the fastest-growing markets for U.S. goods, but growth there has slowed in recent months and exports to that country were up just 4.0 percent for the first seven months of 2013.

Imports from China jumped 8.3 percent in July, lifting the contentious U.S. trade deficit with China to a record $30.1 billion.