US trade gap narrows in July

The trade gap in goods and services was $41.9 billion in July, down from an upwardly revised $45.2 billion in June (AFP Photo/Mark Ralston)

Washington (AFP) - The US trade deficit narrowed in July as exports increased and imports fell sharply, led by a decline in consumer goods, the Commerce Department reported Thursday.

The trade gap in goods and services was $41.9 billion in July, down from an upwardly revised $45.2 billion in June.

The shrinkage was stronger than expected, with analysts putting it at $42.7 billion.

Analysts said the improvement could bode well for economic growth in the third quarter.

"Much better core numbers, but not yet clear if trade will boost Q3 GDP growth," said Ian Shepherdson of Pantheon Macroeconomics.

Exports rose 0.4 percent to $188.5 billion in July, as strong gains in shipments of automobiles and industrial supplies and materials outweighed a decline in consumer goods.

"This was the best export performance since October but follows months of sluggish data since the end of the West Coast port dispute," Shepherdson said, referring to the slowdown early in 2015 that created a goods bottleneck.

Imports slid 1.1 percent from June to $230.4 billion, mostly reflecting a sharp drop in consumer goods.

The US trade gap with the 28-nation European Union rose five percent to a record $15.2 billion, but with many other countries the deficit narrowed, especially in Latin America.

The gap with NAFTA trade partner Mexico dropped 44 percent and that with Brazil, 78 percent.

The politically sensitive trade gap with China rose slightly to $31.6 billion.

Imports of crude oil rose to 236.6 million barrels from 223.4 million in June.

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