US Trade Deficit Shrinks Again After Exports Are Up

The US trade deficit has fallen to its lowest point in over four months off the back of record food and manufacturing exports, according to official figures released today.

In the figures released by the US Commerce Department, the trade deficit was said to have decreased from $59.4 billion in June to $59.2 billion in July – reflecting a 0.3% decrease over the course of the month.

The trade deficit reflects the difference between exports and imports in an economy, where imports are greater than exports. Generally speaking, it is more desirable for economic growth to operate as near to a trade surplus as possible, showing a step in the right direction for the US economy.

Despite higher fuel costs as a result of the rising cost of crude oil, strong car and food exports have moved the deficit closer to positive territory, as a move towards economic recovery after troubled times over the last few months.

Furthermore, with oil prices set to decrease after oil production and supply increases later this year, the US trade deficit could shrink even further before 2007 is over.

High exports were the main factor in shrinking the trade gap, up 2.7% on the month for the fifth consecutive increase to $137.7 billion. Analysts have suggested that the continued weak dollar is having a positive effect on international exports, which dragged the deficit closer to positive figures.

Total US imports over the month of July were up at a record $196.9 billion, in spite of the overall closing of the gap.

The news was well received on global stock markets today, which were already buoyant after the news of OPEC’s shock decision to increase oil output as of November of this year, which looks set to enhance economic growth and lower manufacturing costs globally.

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