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 consumers curbed their spending on imported goods, a government report showed Friday.
The nation's trade deficit narrowed by 3.5% to $59.1 billion, the Commerce Department said.
Overall imports were down 2.4% for the month. Imports of autos fell to their lowest level since March 2005. Read the full release.
If imports continue to fall, this will be a technical boost to U.S. gross domestic product. But observers say there's no doubt that the economy has now entered recession as the credit crunch has hit already-weakened consumer and business sectors.
At the same time, exports dropped by 2.0% in August, marking the biggest decline since June 2004. The decrease came even as exports from Boeing Co. rose.
Unionized machinists went on strike against the aerospace giant in early September, which will depress aircraft deliveries in coming months -- just one factor leading economists to conclude that the nation's exports will decline throughout the rest of the year.
Economists surveyed by MarketWatch had expected August's deficit to narrow to $58.5 billion. See Economic Calendar.
Meanwhile, 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 has been running only slightly above last year's pace -- indicating that one bright spot in the recent economic gloom is that the trade imbalance is showing improvement.
Imports of goods alone fell 3.3% to $188.5 billion in August. Exports of goods alone dropped 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.
Petroleum at deficit
The nation's petroleum deficit narrowed 17.1% to $35.6 billion, turning down after having hit 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 amounted to $119.99 for August, down from $124.66 in July.
The U.S. imported 308.4 million barrels, equating to 9.9 million barrels on daily basis, down from 342.0 million barrels and 11.0 million barrels, respectively, 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.
In a separate report Friday, the Labor Department reported that an index for U.S. import prices fell 3% in September, picking up from a drop in August. September marked the largest decline since the index fell 3.1% in April 2003. See full story.
