Bloomberg The numbers: The advance trade deficit in goods widened to $72.8 in August, up 0.5% from the prior month, according to the Commerce Department’s advanced estimate released Thursday. That was smaller than the $74 billion estimate of economists polled by MarketWatch. The report is used by the government to better measure GDP.
The government’s advance report on wholesale inventories showed a 0.4% gain in August. And advanced retail inventories were flat.
What happened: Both imports and exports rose in August, but imports rose at a faster pace.
The gain in exports was led by capital goods and industrial supplies. autos also fell. At the same time imports were led by consumer goods.
On Aug. 1, President Donald Trump has announced that the U.S. would slap 10% tariffs on $300 billion of Chinese goods starting at the beginning of September.
Retail inventories excluding autos ticked up 0.1%.
Big picture: The deficit doesn’t capture the fact that world trade volumes are falling thanks to the trade war with China and China’s cyclical slowdown, said Ian Shepherdson, chief economist at Pantheon Macroeconomics. This will ultimately slow U.S. export growth.
“Accordingly, we have to expect net trade to be a drag on GDP growth through the year-end and into 2020,” Shepherdson said in a note to clients.
Market reaction: Stocks DJIA, +0.61% were set to open higher Thursday on signs that the U.S. and China may try to ease trade tensions.
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