Implications: After ballooning to a two-year high in July, the trade deficit in goods and services shrank in August to $70.4 billion, as exports grew while imports declined.  However, we prefer to focus on the total volume of trade, imports plus exports, as it shows the extent of business and consumer interaction across the US border. This measure increased in August, rising by $2.1 billion. Total trade volume is up 6.5% from a year ago, with exports up 5.1% and imports up 7.6%.  Although the pickup in imports is good news, part of this is being pulled forward as companies made sure they had adequate supplies before the dockworkers’ strike by East and Gulf Coast workers, which happened and ended in October. There also continues to be a major shift going on in the pattern of US trade.  Year- to-date through August, imports from China were up only 1.3% versus the same period in 2023 and down 24.3% versus the same period in 2022.  China used to be the top exporter to the US.  Now the top spot is held by Mexico; China has fallen to number two with Canada nipping at her heels.  Meanwhile, global supply chain pressures have eased substantially over the past few years.  This was confirmed by the New York Fed’s Global Supply Chain Pressure Index in August, with the index 0.2 standard deviations above the index’s historical average. For some perspective, two years ago in the month of August the index sat 1.51 standard deviations above the index’s historical average.  Also in today’s report, the dollar value of US petroleum exports exceeded imports once again.  This marks the 27th consecutive month of the US being a net exporter of petroleum products.

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