If the July trade deficit of the United States is anything to go by, then the largest economy in the world is potentially heading to wards recording its highest trade deficit for 2018 in a decade according to analysts.
The trade deficit of the country rose by as much as 10 per cent in July driven by record imports which was the highest in the last five months.
The US Commerce Department said that the value of the trade deficit for the month of July touched $50.1 billion compared to a revised number of $45.7 billion in June. Experts had been expecting a trade deficit of $50.4 billion for July.
In the first seven months of 2018., the total trade deficit of the country stood at almost $338 billion which was $316 billion in the same period a year earlier.
The country imported goods worth $261.2 billion in July which was a 0.9 per cent rise compared to the month earlier.
Rising demand for oil and higher prices for petroleum have primarily increased the total value of the U.S. imports in 2018. However, there has also been a surge in demand among American for imported autos, computers and pharmaceutical drugs.
At the same time, there was a 1 per cent drop in exports even though the number was near a monthly record in July. The major hist in the US exports were passenger planes and soybeans.
Still compared to the same period a year earlier, the country saw an increase in soybean exports. There were many importers from other countries who wanted to finalize deals before the setting of U.S. and retaliatory foreign tariffs. There was a 43 per cent spike in the exports of soy beans for the first seven months of the current year at $18.8 billion compared to a total export value of $13.1 billion in the same period a year ago.
And despite the fact that large amounts of foreign oil are still imported by the US, July saw a record export of domestically supplied petroleum. Recently, record amount of oil has been produced in the US after a long period primarily because of a fracking revolution which has opened up fuel stores in large inland shale deposits that were inaccessible earlier.
And most interestingly, July also reported higher import of steel and aluminum compared to the same period last year despite the tariffs imposed on such imports by US president Donald Trump.
Analysts have concluded, based n the most recent data, the US economy is growing at a steady pace despite the trade tariffs and tensions which is indicative of strengths in a number of crucial economy segments. There was has been a 4.2 per cent expansion of the gross domestic product in the spring and economists are forecasting a 3 per cent growth for the third quarter.
(Adapted from MarketWatch.com)