U.S. Trade Gap Registers Surprise Drop

Largest drop since May

The trade deficit narrowed for the first time in four months in August on higher exports driven by a weak dollar and lower imports amid lackluster domestic demand, the government said on Oct. 9.

The goods and services trade gap fell 3.6% to $30.7 billion from a revised $31.9 billion in July, the Commerce Department reported. Most analysts had expected a $33 billion deficit on the back of a possible import jump fueled by a recovery from prolonged recession.

In percentage terms, the August deficit dip was the largest recorded since May, figures showed.

August exports rose slightly to $128.2 billion while imports fell to $158.9 billion.

The trade deficit in goods narrowed by two percent to $41.9 billion in August, while the trade surplus in services widened by 2.7% to $11.2 billion.

Exports of goods were virtually unchanged at $86.8 billion and imports decreased to $128.7 billion.

Exports of services increased to $41.4 billion and imports decreased to $30.2, the government data showed.

The trade deficit with Canada, the largest U.S. trading partner, narrowed by 27.9% to $1.5 billion in August while the deficit with Mexico, the second largest export destination and third largest import destination, widened by 34.6% to $4 billion.

The politically sensitive trade deficit with China narrowed by less than 1% to $20.2 billion, and the deficit with Japan widened by 11.6% to $4.3 billion.

The dollar had depreciated against the currencies of most of its major trading partners, making its exports more competitive.

Copyright Agence France-Presse, 2009

TAGS: Trade
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