US trade deficit increases less than expected in August

The US trade deficit edged higher in August as the surplus in America's trade in services with the rest of the world shrank.

America's shortfall in its trade of goods and services with the rest of the world increased by $1.2bn in August to reach $40.7bn, according to the Department of Commerce.

That was slightly less than the $41.5bn forecast by the consensus.

Exports edged higher by $1.5bn to hit $187.9bn while imports rose by $2.6bn to $228.6bn.

The US's surplus on its services balance slipped by $1.2bn to $19.6bn, while that for its trade in goods was largely unchanged.

"The decline in the services surplus was mainly due to a rise in imported charges for the use of intellectual property. We wouldn’t be surprised if that reflects the surge in corporate tax inversions over the past few years," Paul Ashworth, chief US economist at Capital Economics said in a research note sent to clients.

Year-to-date the country's total exports had fallen 1.3%, alongside a 3.6% drop in purchases from abroad.

"Our calculations suggest that third-quarter real goods export growth will be as high as 12.0% annualised, with real import growth lagging well behind at around 3.0%. Accordingly, we expect GDP growth to be a healthy 2.5%, even if some of the surge in exports is offset by a drag from falling inventories.

"[...] Nevertheless, the broader picture is that exports are beginning to show signs of life as the drag from the dollar’s surge in 2014 and 2015 begins to fade," Ashworth said.

"The key story in the recent trade numbers is still the surge in soybean exports, which will add about three-quarters of a percentage point, gross, to Q3 GDP growth. The net effect, though, depends on how much of the jump in exports is offset by falling inventories. The BEA usually does not actively measure crop inventories quarter-to-quarter, relying on interpolation of annual estimates from the USDA, but they reserve the right to tweak the data in unusual circumstances," said Ian Shepherdson, chief economist at Pantheon Macroeconomics.