The US trade gap narrows to its lowest level in almost three years

Analysts had expected a smaller change in the deficit and the latest figures showed exports rose $4.1 billion to $256 billion in August

BSS/AFP

October 6, 2023, 12:50 p.m

Last changed: October 6, 2023, 12:54 p.m

Shipping containers are pictured at Yusen Terminals (YTI) on Terminal Island at the Port of Los Angeles in Los Angeles, California, USA, January 30, 2019. Photo: Reuters

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Shipping containers are pictured at Yusen Terminals (YTI) on Terminal Island at the Port of Los Angeles in Los Angeles, California, USA, January 30, 2019. Photo: Reuters

A surge in exports helped reduce the overall U.S. trade deficit in August to its lowest level since late 2020, according to government data released Thursday.

The trade gap narrowed to $58.3 billion, down nearly 10 percent from the revised July figure of $64.7 billion, the Commerce Department said.

Analysts had expected a smaller change in the deficit and the latest figures showed exports rose $4.1 billion to $256 billion in August.

Imports fell $2.3 billion from July to $314.3 billion.

While consumer spending has helped boost U.S. trade, analysts warn it could slow after the central bank’s sharp interest rate hikes last year aimed at reducing inflation and cooling demand.

“Trade flows have slowed overall,” economist Rubeela Farooqi of High Frequency Economics told AFP.

“But in the quarter to date, exports have risen and imports have fallen, indicating some moderation in domestic demand,” she added.

The job market remains strong and households continue to spend money.

But Farooqi warned that there could be a slowdown in growth later this year as the labor market cools “more significantly,” depressing demand for goods and services.

As global growth slows, including among the United States’ major trading partners as monetary policy tightens, exports could also take a hit.

According to the Commerce Department, most of the increase in exports in August came from shipments of goods, particularly manufactured goods such as crude oil.

Imports of goods fell due to a decline in consumer goods and products such as semiconductors.

The goods deficit with China fell by $1.3 billion to $22.7 billion in August, with imports from the country falling more than exports to it, data showed.