Record-high sales of American products impede U.S. trade for seven months. The deficit with China declined as imports edged down slightly following a string of high-profile recalls.
The Commerce Department reported Thursday that the deficit declined to $57.6 billion (EUR 40.72 billion) in August, down 2.4 percent from the July imbalance. It was lowest gap between exports and imports since January and a much better showing than had been expected.
The improvement reflected a 0.4 percent rise in exports, which climbed to a record $138.3 billion (EUR 97.77 billion). Sales of farm products including wheat, soybeans and corn, and exports of industrial products such as chemicals and steel both hit record levels.
Imports actually dropped by 0.4 percent to $195.9 billion (EUR 138.48 billion), reflecting lower shipments of foreign cars and furniture, which offset a big increase in the foreign oil bill, which rose to the highest level in a year.
In other economic news, the Labor Department said that the number of newly laid off workers filing claims for unemployment benefits fell by 12,000 last week to 308,000. That was a better showing than had been expected.
The politically sensitive deficit with China fell by 5.3 percent to $22.5 billion (EUR 15.91 billion). U.S. exports were up, led by increased sales of aircraft and soybeans, while imports slipped a slight 0.7 percent. The decline in imports occurred after a series of recalls of tainted products from toys with lead paint to toothpaste and unsafe tires.
However, the small drop came in such areas as computers and furniture, where there have not been highly publicized recalls. Imports of toys from China actually rose as American retailers stocked their shelves for Christmas.
The boom in U.S. exports is helping to cushion the U.S. economy from the adverse effects of the housing bust and a severe credit crunch. Overseas demand for U.S. goods is being helped by a falling value of the dollar against many other currencies. That development pushes up the cost of foreign vacations and imports for American consumers but makes U.S. products cheaper in foreign markets.
Through the first eight months of this year, the trade deficit is running at an annual rate of $708 billion (EUR 500.49 billion), down 6.7 percent from last year's imbalance of $758.5 billion (EUR 536.19 billion), which had been the fifth consecutive record deficit.
President George W. Bush's critics still contend that his trade policies have been harmful to the United States, resulting in record-high deficits for most of his time in office and contributing to the loss of 3 million manufacturing jobs since January 2000.