The trade deficit in the U.S. unexpectedly narrowed in July to the lowest level in six months as exports climbed to a record.
The gap shrank 0.6 percent to $40.5 billion, the smallest since January, from a revised $40.8 billion in June that was narrower than previously estimated, the Commerce Department reported today in Washington. The median forecast in a Bloomberg survey of 65 economists called for a widening to $42.4 billion. Sales to foreign customers climbed 0.9 percent on growing demand for American autos and petroleum products.
Sales of American products to countries such as Mexico, Brazil and the U.K. helped make up for slowing purchases from the European Union, one reason U.S. manufacturing has been picking up. Spurred by steady job growth, gains in consumer spending and business investment are also giving a lift to imports.
“The U.S. economy is doing better than almost any industrial country in the world,” Joel Naroff, president of Naroff Economic Advisors Inc. in Holland, Pennsylvania, said before the report. “It means we’re pulling more in from the rest of the world. It’s the consumer, it’s business investment.”
Among other reports today, applications for unemployment benefits were little changed last week as an improving economy prompted businesses to retain staff.
Jobless claims rose by 4,000 to 302,000 in the week ended Aug. 30, according to Labor Department data. The median forecast of 49 economists surveyed by Bloomberg called for 300,000. The total number of people on benefit rolls fell to the lowest level in more than seven years.
Companies took on fewer workers than projected in August, a private report based on payrolls showed. The 204,000 increase in employment followed a 212,000 gain the prior month that was smaller than initially estimated, according to figures from the Roseland, New Jersey-based ADP Research Institute.
Stock-index futures rose, with the Standard & Poor’s 500 Index near an all-time high, after the European Central Bank unexpectedly cut interest rates and announced a bond-buying program to stimulate the economy. The contract on the S&P 500 expiring this month climbed 0.4 percent to 2,006.8 at 8:37 a.m. in New York.
Bloomberg survey estimates for the trade gap ranged from deficits of $40 billion to $44.3 billion. The Commerce Department initially reported a $41.5 billion shortfall for June.
Exports climbed to $198 billion from $196.2 billion in June. Shipments of goods, including autos and non-petroleum products, were the highest on record.
Imports increased 0.7 percent to $238.6 billion from $237 billion in the prior month as Americans bought more autos and crude oil.
Sales of U.S. petroleum products swamped purchases of foreign crude, leaving the trade gap on the fuel at the lowest level since May 2009.
After eliminating the effects of price fluctuations, which generates the numbers used to calculate gross domestic product, the trade deficit shrank to $48.2 billion, the smallest since December, from $48.9 billion in June.
The world’s largest economy grew faster than previously thought in the second quarter, rising at 4.2 percent annualized rate, thanks in part to a smaller trade deficit.
The trade gap with China, the world’s second-biggest economy, climbed 2.7 percent to a record $30.9 billion, today’s report showed.