US trade deficit in goods narrows unexpectedly in July

America's shortfall in trade on goods with the rest of the world narrowed unexpectedly last month, but the details of the report were weak.

According to preliminary data from the Department of Commerce, the US trade deficit in goods shrank from $74.2bn for June to £72.3bn in July.

Economists had penciled-in a reading of $74.0bn.

Exports rose at a month-on-month pace of 0.7% to reach $137.3bn while imports declined by 0.4% to $209.7bn.

Also according to Commerce, wholesale inventories grew at a 0.2% month-on-month clip in July (consensus: 0.1%) to reach $679.4bn, putting them ahead by 7.1% versus a year ago.

Retail inventories meanwhile were pegged at up by 0.8% on the month at $665.1bn.

Commenting on the likely implications of Thursday's trade numbers, Barclays Research's Michael Gapen and Jonathan Millar highlighted the 2.5% drop seen in imports of capital goods, which followed on a 0.5% decline in June.

That, they said, showed that businesses remain "hesitant" to spend.

They also highlighted the year-on-year declines of 1.9% and 1.2% seen in nominal exports and imports and that US trade volumes appeared to be being dragged down by slower growth worldwide and trade policy uncertainty.

On the back of the report on trade, they trimmed their tracking estimate for third quarter GDP from 1.8% to 1.7%.