Ahead of the Bell: US trade gap

US trade gap expected to widen slightly in August after hitting 6-month low

Associated Press
US trade deficit drops to $40.1 billion in August
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In this March 14, 2014 photo, assembly line workers build a 2015 Chrysler 200 automobile at the Sterling Heights Assembly Plant in Sterling Heights, Mich. The Commerce Department reports on the U.S. trade deficit for August on Friday, Oct. 3, 2014. (AP Photo/Paul Sancya)

WASHINGTON (AP) -- The Commerce Department reports on the U.S. trade deficit for August. The report will be released Friday at 8:30 a.m. EDT.

WIDER DEFICIT: The expectation is that the deficit widened slightly in August, increasing to $40.8 billion, according to a survey of economists by data firm FactSet.

EXPORTS AND IMPORTS: In July, the deficit fell to $40.5 billion, its lowest level since January. Both exports and imports increased, suggesting increased spending by consumers and businesses. That's a good sign for economic growth potential in the second half of the year.

The trade deficit with China hit a monthly record in July, rising to $30.9 billion, a development that puts more pressure on Congress and the Obama administration to protect American jobs.

U.S. manufacturers say that China is manipulating its currency for a trade advantage. They say China undervalues the yuan to make the goods it manufactures cheaper when they are exported, and American products more expensive in China.

A higher trade deficit subtracts from economic growth because it usually means that foreign companies sell more in this country while U.S. producers see fewer sales in overseas markets.

Through July, the trade deficit widened to $295.3 billion, up 4.6 percent from the same period a year ago.

In 2013, the trade deficit declined by 11.4 percent. That reflected in part a boom in U.S. energy production that cut into America's dependence on foreign oil while boosting U.S. petroleum exports to a record high.

Rising domestic energy production has continued to help lower the petroleum trade deficit this year.

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