MW: U.S. trade gap narrows as global economy stalls
By Greg Robb, MarketWatch
WASHINGTON (MarketWatch) -- The U.S. trade deficit narrowed in August, as U.S. trading partners cut back their demand for American products, a government report showed Friday.
The nation's trade deficit narrowed by 3.5% to $59.1 billion, the Commerce Department said. Exports dropped by 2.0% in August, the biggest decline since June 2004, even though exports from Boeing Co. increased.
Boeing machinists went on strike in early September, which will depress aircraft deliveries in coming months. That is just one factor leading economists to conclude that export will decline throughout the rest of the year.
Analysts had been assuming that weaker global growth would trim exports. Economists surveyed by MarketWatch had expected the deficit to narrow to $58.5 billion.
U.S. consumers also cut back on their appetite for foreign goods. Imports of autos fell to their lowest level since March 2005.
Overall imports were down 2.4% in August.
If imports continue to fall, this will be a technical boost to U.S. gross domestic product. But economists say the economy has now surely entered a recession as the credit crunch has hit already weakened consumer and business sectors.
July's trade deficit was revised slightly to $61.3 billion from the initial estimate of $62.2 billion.
For the first eight months of the year, the nation's trade gap is only slightly above last year's pace - indicating that one bright spot in the recent economic gloom is that the trade imbalance is starting to shrink.
Imports of goods alone fell 3.3% to $188.5 billion. Exports of goods alone fell 2.6% to $117.6 billion.
The largest drop in exports came from autos, industrial supplies and consumer goods.
Meanwhile, the U.S. imported less petroleum, autos, and capital goods.
The petroleum deficit
The nation's petroleum deficit narrowed 17.1% to $35.6 billion after hitting a record in July. The decline came as imports of crude oil fell for the first time in six months. The average price per barrel of oil fell to $119.99 in August from $124.66 in July.
The U.S. imported 308.4 million barrels, equating to 9.9 million barrels per day, down from 342.0 million, or 11.0 million barrels per day in July.
Despite the overall improvement, the U.S. trade deficit with China widened to $25.3 billion in August from $22.5 billion in the same month last year. Imports from China hit a new record high.
The U.S. exported a record amount of goods to South and Central America and the OPEC nations.
