The U.S. trade deficit narrowed 9% in August, to $58.3 billion from $64.7 billion (revised down from $65 billion) in July. This was the smallest trade deficit since June 2020. It also came in lower than the consensus estimates of $68 billion. Compared to last year, the trade deficit has shrunk 13.4%. 

The goods trade deficit continued to narrow in August, with imports dropping and exports rising. With services exports rising more than imports, the services surplus increased in

August. The increase in the services surplus came primarily from an increase in foreign travel to the U.S. 

Imports of capital goods, autos, and consumer goods dropped in August. Slowly growing consumer spending on goods continues to weigh on imports of consumer goods, and high interest rates are weighing on imports of capital goods and autos. 

While exports of industrial supplies and materials rose in August, they are down sharply in 2023 due to weak manufacturing activity in Europe and China. U.S. auto exports have risen in 2023 as supply chain problems have eased. 

PNC expects the trade deficit to continue to narrow into 2024 with weakening global trade flows. A mild U.S. recession next year will weigh on demand for imports of both consumer and business goods.

The PNC Financial Services Group, Inc. is one of the largest diversified financial services institutions in the United States, organized around its customers and communities for strong relationships and local delivery of retail and business banking including a full range of lending products; specialized services for corporations and government entities, including corporate banking, real estate finance, and asset-based lending; wealth management and asset management. For information about PNC, visit www.pnc.com.