WASHINGTON • The US trade deficit fell in July to its lowest level in five months as exports rose broadly, signalling underlying strength in the economy amid concerns about a global slowdown.
While other data yesterday showed a rise in the number filing new claims for unemployment benefits, the trend in jobless claims remained consistent with a strengthening labour market.
The Commerce Department said the trade gap narrowed by 7.4 per cent to US$41.9 billion (S$59 billion), the smallest since February. June's trade deficit was revised to US$45.2 billion from the previously reported US$43.8 billion. When adjusted for inflation, the deficit fell to US$56.2 billion in July from US$59 billion in June.
The smaller deficit implied a modest contribution to gross domestic product from trade early in the third quarter. Trade contributed 0.3 percentage point to the economy's 3.7 per cent annualised growth rate in the second quarter.
Data ranging from consumer spending to employment and housing had suggested the economy retained much of its momentum from the second quarter and was on solid footing when global financial markets were rocked by turbulence triggered by worries over China's economy.
US stock index futures extended gains slightly after the data's release, while the greenback fell further against a basket of currencies. Prices of US government debt rose.
The Labour Department said in another report that initial claims for state jobless benefits rose by 12,000 to a seasonally adjusted 282,000 for the week ended Aug 29. The claims data has no bearing on today's closely watched employment report for August as it fell outside the survey period.
That report will be released less than two weeks before the Federal Reserve's Sept 16-17 policy-setting meeting. There is speculation the US central bank could raise interest rates at that meeting.
In July, exports increased 0.4 per cent to US$188.5 billion. While that was the first increase since April, exports remain constrained by a strong dollar. The dollar has gained 16.8 per cent against the currencies of the United States' main trading partners since June 2014.
There were increases in exports of food, industrial supplies and materials, and capital goods in July. Automobile exports also rose.
Imports fell 1.1 per cent to US$230.4 billion. Imports of consumer goods fell in July. However, automobile imports were the highest on record.
Exports to China fell 1.9 per cent and imports from that country dipped 0.2 per cent. That left the US-China trade deficit at US$31.6 billion, up 0.4 per cent from June. The trade deficit with China will be closely watched in the coming months after Beijing devalued its currency in August.
Exports to the European Union fell 5.3 percent.
REUTERS
