In the most recent international trade release, the nation’s trade gap narrowed to a nearly as expected $41.9 billion in July, after an upward revised gap of $45.2 billion was reported in June. The June number was initially $43.8 billion.

This improvement is representative of a monthly rise of 0.4% in exports, which were led by autos, and a 1.1% contraction in imports, reflecting a decline in pharmaceutical preparations and cell phones, which helped offset a monthly rise in imports of oil as prices were higher in July.

Separate from autos, exports of industrial supplies, specifically nonmonetary gold, showed strength in July. At the same time, exports of capital goods also expanded. Ultimately, this helped offset a monthly decline in exports of civilian aircraft and consumer goods.

By nation, the gap with China widened slightly, to an unadjusted $31.6 billion in the month, while the gap with the European widened more substantially to $15.2 billion, again unadjusted, which makes month-to-month conclusions difficult. Gaps with Mexico and Canada both narrowed.

The good news is that this report is another positive start to the quarter and will lift early third-quarter gross domestic product estimates. However note that these will be cautious estimates as recent market turbulence pushes back conclusions and will make August’s trade data especially revealing.

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