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US trade deficit smallest in six months on rising exports

Shipping containers at the TriPac Inc. terminal a the Port of Oakland in Oakland, California.
Ken James | Bloomberg | Getty Images
Shipping containers at the TriPac Inc. terminal a the Port of Oakland in Oakland, California.

The U.S. trade deficit narrowed in July to its lowest point in six months as exports rose to a record high, supporting views of sturdy economic growth in the third quarter.

The Commerce Department said on Thursday the trade gap fell 0.6 percent to $40.5 billion, the lowest since January. June's trade deficit was revised to $40.8 billion.

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Economists polled by Reuters had expected the deficit to widen to $42.2 billion in July from a previously reported $41.5 billion shortfall in June.

When adjusted for inflation, the deficit narrowed to $48.2 billion, the lowest since December 2013, from $48.9 billion in June, which could see economists raise their estimates for third quarter gross domestic product.

Trade weighed on growth in the April-June period.

Exports increased 0.9 percent to a record high of $198.0 billion in July, supported by a surge in goods, automobiles, parts and engines, as well as non-petroleum products.

Imports rebounded 0.7 percent in July to $238.6 billion after declining in June. The rebound in imports is a sign of underlying strength in domestic demand.

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The increase in imports was driven by food and autos, which both hit record highs.

Petroleum imports declined, which saw the petroleum deficit hitting its lowest level since May 2009. A domestic energy boom has seen the United States reduce its dependence on foreign oil.

The politically sensitive trade gap with China was the highest on record in July.

By Reuters

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