Exports dropped by -$0.6 B, outpacing a -$0.4 B drop in imports, to slightly widen the trade deficit to $43.7 B in July.  Capital goods exports and imports both increased, with exports (+$0.9 B) led by civilian aircraft and imports (+$1.3 B) led by computers and computer accessories. Automotive exports and imports both decreased, by -$0.6 B and -$0.8 B respectively. Service imports were essentially unchanged while service exports decreased for both travel (-$0.3 B) and “other business services” (e.g. professional and management services) (-$0.2 B).

The Federal Open Market Committee’s (FOMC) Beige Book, which is used to gauge economic conditions for FOMC meetings, found that economic activity expanded at a modest to moderate pace in July and August in all twelve Federal Reserve districts. Some contributors expressed concerns about slowdowns in auto production, and agricultural conditions were mixed due to drought in multiple districts, but business and consumer loans grew at a modest pace, manufacturing expanded modestly overall, and construction increased slightly. Wage gains were modest to moderate despite a labor market generally described as tight, and price rises were modest, with a number of districts reporting increases in input prices exceeding gains in selling prices. The Beige Book was assembled before Hurricane Harvey made landfall and only includes preliminary information on the hurricane’s impact.

The Energy Information Agency’s Petroleum Status Report for the week following Hurricane Harvey showed a drop in refinery operational capacity to 79.7% versus the previous week’s 96.6%, resulting in drops for gasoline production to 9.5 M barrels/day from 10.6 M, and for distillate production to 4.5 M barrels/day from 5.1 M.   Inventories dropped for both gasoline  (-3.2 M barrels) and distillates (-1.4 M barrels), but increased for crude oil (+4.6 M barrels). Motor gasoline product supplied was 9.5 M barrels/day, down 1% from the same period last year, and gasoline supplies are at the upper limit of their average range for this time of year. The national average price for gasoline was $2.679 / gallon, up $0.280 compared to the previous week, and up $0.456 compared to the same time period a year ago.