The U.S. trade deficit narrowed slightly in July as exports continued to grow this year at a stronger pace than imports, even though both categories set records, a Commerce Department report showed on Tuesday.
The monthly trade gap shrank slightly to $59.2 billion in July, from an upwardly revised estimate of $59.4 billion in June, first reported as $58.1 billion. The median estimate of Wall Street analysts surveyed before the report was $59.0 billion.
Aided by a weak U.S. dollar and overseas economic growth, exports increased 2.7 percent in July to a record $137.7 billion. It was the fifth consecutive monthly gain, and exports are up 11.3 percent for the year-to-date compared to the same period in 2006.
Exports also set records in four separate categories: foods, feeds and beverages; capital goods; autos and auto parts; and consumer goods.
"The export story, with the strong global economy impacting the U.S. economy, has been a positive trend for the last year or two," said Scott Brown, chief economist at Raymond James & Associates in St. Petersburg, Florida.
Traders mostly shrugged off the report, waiting instead for a speech by Federal Reserve Board Chairman Ben Bernanke later on Tuesday. U.S. Treasury debt prices were steady at lower levels after the data, while the dollar was little changed.
High oil prices in July helped push U.S. imports to a record $196.9 billion in July, up 1.8 percent from June. The average price for imported crude oil in July was $65.56 per barrel, second only to the record $66.13 set in August 2006.
Imports from the Organization of Petroleum Exporting Countries hit a record $14.8 billion in July, and was also the highest since August 2006.
Total U.S. imports have risen 4.2 percent in the first 7 months of 2007, compared to the 11.3 percent gain for exports. The faster growth in exports than imports "suggests a slowing economy," said Subodh Kumar, chief investment strategist at Subodh Kumar & Associates in Toronto.
"But the data may add some support to the view that the economy may be slowing but it is not heading into a recession," Kumar added.
The U.S. trade deficit with China grew 12.5 percent in July to $23.8 billion, the second highest on record, despite a spate of bad publicity about the safety of Chinese goods.
Imports from the Asian manufacturing giant totaled $28.6 billion in July, slightly below the record of $29.4 billion set in October 2006.
The annual trade gap with China is on track to surpass last year's record of $233 billion. It totaled $141.3 billion through the end of July, up 16.4 percent from the same period last year.
Earlier on Tuesday, Chinese government data showed China's overall trade surplus hit its second-highest level on record in August at $25 billion. Analysts had projected an even bigger surplus, but exports grew slower than expected.
Chain Store Sales Rise
In a separate report, the International Council of Shopping Centers and UBS Securities said weekly retail chain stores sales rose 0.3 percent in the week ended Sept. 8. Over the past year, sales were up 2.9 percent, compared to 2.3 percent a week earlier.
"Sales improved moderately over last week as the August sales momentum continued into the September fiscal month," said ICSC chief economist Michael Niemira. "Despite the more negative economic picture painted by the August decline in employment, consumers continued to spend at a moderate pace."
The Labor Department said on Friday that U.S. nonfarm employment fell by 4,000 in August, the first decline in four years.