U.S. Trade Deficit Narrows Sharply in July

Exports reach highest level in two years.

The U.S. trade deficit dropped more than expected in July as exports reached their highest level in two years, official data showed Thursday, boosting hopes for the U.S. economic recovery.

The trade deficit dropped to $42.8 billion in July, a 14% decline from the previous month's revised figure of $49.8 billion -- its highest level in 20 months, the Department of Commerce said.

The total July exports rose 1.8% to $153.3 billion from June to its highest level since August 2008 on the back of strong sales of aircraft, industrial machinery, computers and telecommunications equipment, it said.

Imports fell 2.1% to $196.1 billion in July from the previous month.

The July deficit beat most analysts' expectations of $47.3 billion.

Traditionally, increasing U.S. imports are seen as heralding greater demand from American consumers, who play a critical role in fueling local and global growth.

The increase in July exports also offers good news for President Barack Obama as he struggles to show Americans his economic policies are helping the United States recover from its worst recession in decades.

The U.S. trade deficit with China also fell to $25.92 billion from $26.15 billion in June as lawmakers increasingly call for steps against what they see as unfair trade practices by China.

Copyright Agence France-Presse, 2010

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