U.S. July Advance Goods Trade - Widest post-tariff deficit, Initial and Continued Claims fall
July’s advance goods trade deficit of $118.8bn versus $101.4bn in June is the widest since the record $158.7bn seen in March 2025 ahead of the tariffs. The deficit has picked up since the Supreme Court ruled against the reciprocal tariffs introduced in April 2025. Initial claims remain low, falling to 203k from 207k.
The trade data shows exports down 2.9%, a third straight decline, while imports rose by 3.7%, rebounding from a 2.4% June decline. The exports decline can only partially be explained by a 1.3% fall in prices while imports increased despite a 0.4% decline in prices.
The exports decline was led by a plunge of 11.2% in industrial supplies which appears too steep to explain on energy alone. The imports increase was led by a surge of 11.3% in capital goods which is a positive signal for business investment.
Still, the wider than expected trade deficit is a negative for Q3 GDP, though in part offset by positive advance inventory data for July, wholesale up by 1.3% and retail up by 0.7%.
The initial claims 4-week average of 205.5k is still low if a 4-week high. This covers the week after that in which August’s non-farm payroll was surveyed. That low initial claims in July did not result in a strong July non-farm payroll suggests the latest initial claims data should be read cautiously.
Continued claims however may have more relevance, and not only because the latest data covers the payroll survey week. Continued claims may saw more about hirings than initial claims. A fall of 18k to 1.778m was seen, and the level is a 4-week low, though the 4-week average looks fairly stable.
Our payroll forecast is for a 75k increase, which is still modest, but would be the strongest since April.