U.S. Trade Deficit Shrinks in July

by: Susan Lerner

In an unexpected sign of growth, the U.S. July trade deficit dipped 0.3% to $59.2B from June's $59.4B as exports continued this year's trend of growing at a faster pace than imports, and foreigners snapped up big-ticket items such as aircraft, telecommunications equipment and electrical goods. The weak dollar, which makes U.S. goods cheaper for foreign buyers has helped boost exports this year. Economists' deficit forecasts had ranged from $57.5B to $61.5B. June's figure was revised upward from an originally reported $58.1B. One economist said that, if sustained, the improvement in the real deficit would add nearly one percentage point to real GDP growth in Q3. According to the data, released by the Commerce Department, exports logged their fifth straight monthly gain, increasing 2.7% to $137.7B, while imports jumped 1.8% to $196.9B. High oil prices were a major contributor to the import rise as imports from OPEC countries hit a record $14.8B. Meanwhile, the U.S. trade deficit with China grew 12.5% to $23.8B, the second-highest on record, bringing the total through July to $141.3B, on track to exceed last year's record $233B. The gap with the eurozone grew to $10.39B from $7.43B, while the gap with Mexico fell to $5.62B from $6.39B and the deficit with Canada narrowed to $5.69B from $5.86B.

Sources: Press release, Reuters, Bloomberg, Wall Street Journal
Commentary: U.S. Trade Deficit: Not as Ominous as it SoundsWhy The Dollar Hasn't Collapsed Amidst The Trade Deficit
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