The US trade deficit widened to $53.1bn from $50.8bn for June, falling short of a market expectations for a narrowing. This widening was led by a sharp 3.3% drop in real goods exports. Capital goods exports in particular fell 3.9%, the largest monthly decline since 2008. Real goods imports were weak as expected, falling by 0.2% after a 2.0% jump over the previous month, reflecting soft consumer demand. The report is considerably weaker than assumed in the advance estimate of Q2 GDP.
Meanwhile, initial jobless claims fell to 395k during the first week of August, from 402k the previous week. It is possible that the series of risk aversion trades witnessed in financial markets over the past trading sessions will spill over to the job market; however, the economic data releases are not yet reflecting this scenario. All else equal, today’ report points to labour market conditions that are on par with July.