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US trade gap narrows on oil price fall and record exports
Source: Agencies |
September 9, 2011, Friday
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Print Edition
Print Edition
A RECORD level of exports and a drop in oil prices narrowed the United States trade deficit in July to its lowest point in three months. The jump in exports could give the economy a lift at a time when it is at risk of another recession.
The trade deficit fell to US$44.8 billion in July, down 13.1 percent from June, the US Commerce Department reported yesterday.
American manufacturers sold more cars, airplanes and industrial machinery in foreign markets. Exports rose 3.6 percent to a record US$178 billion.
Imports dipped 0.2 percent to US$222.8 billion. Most of the decline came from a drop in oil imports. Oil imports fell 6 percent to US$35.5 billion, mostly because oil prices fell.
Paul Dales, senior US economist for Capital Economics, said the report suggests the trade deficit won't drag on growth in the July-September quarter. It may even give growth a boost. But he said the annual growth rate for exports has slowed from earlier in the year, so trade shouldn't offset weakness in the broader US economy.
The overall economy grew at a meager 0.7 percent in the first six months of this year, the slowest growth since the recession ended two years ago.
Economists predict a modest rebound to around 2 percent growth in the second half of this year. Some of that strength is expected to come from stronger export sales.
A narrowing trade deficit adds to economic growth. It signals that more products are being made in the US and less money is flowing overseas.
The US trade gap through July was running at an annual rate of US$565.3 billion, 13.1 percent higher than last year's imbalance of US$500 billion.
For July, the US trade deficit with China rose 1.1 percent to US$27 billion. Through the first seven month of this year, the deficit with China is 10 percent higher than the same period in 2010.
The US deficit with Japan jumped by 30 percent in July to US$5.3 billion, reflecting a sharp rebound in imports from Japan as that country's factories resumed more normal production following the March 11 natural disasters. The curtailment of Japanese shipments to the US curbed American production in such areas as autos where the factories are dependent on getting component parts from Japan.
Oil imports declined because the volume of shipments fell as did the price. The average price of a barrel of imported crude oil dropped to US$104.27 in July, down from US$106 in June. Oil prices have declined further since then so economists are expecting oil imports to fall in coming months.
The trade deficit fell to US$44.8 billion in July, down 13.1 percent from June, the US Commerce Department reported yesterday.
American manufacturers sold more cars, airplanes and industrial machinery in foreign markets. Exports rose 3.6 percent to a record US$178 billion.
Imports dipped 0.2 percent to US$222.8 billion. Most of the decline came from a drop in oil imports. Oil imports fell 6 percent to US$35.5 billion, mostly because oil prices fell.
Paul Dales, senior US economist for Capital Economics, said the report suggests the trade deficit won't drag on growth in the July-September quarter. It may even give growth a boost. But he said the annual growth rate for exports has slowed from earlier in the year, so trade shouldn't offset weakness in the broader US economy.
The overall economy grew at a meager 0.7 percent in the first six months of this year, the slowest growth since the recession ended two years ago.
Economists predict a modest rebound to around 2 percent growth in the second half of this year. Some of that strength is expected to come from stronger export sales.
A narrowing trade deficit adds to economic growth. It signals that more products are being made in the US and less money is flowing overseas.
The US trade gap through July was running at an annual rate of US$565.3 billion, 13.1 percent higher than last year's imbalance of US$500 billion.
For July, the US trade deficit with China rose 1.1 percent to US$27 billion. Through the first seven month of this year, the deficit with China is 10 percent higher than the same period in 2010.
The US deficit with Japan jumped by 30 percent in July to US$5.3 billion, reflecting a sharp rebound in imports from Japan as that country's factories resumed more normal production following the March 11 natural disasters. The curtailment of Japanese shipments to the US curbed American production in such areas as autos where the factories are dependent on getting component parts from Japan.
Oil imports declined because the volume of shipments fell as did the price. The average price of a barrel of imported crude oil dropped to US$104.27 in July, down from US$106 in June. Oil prices have declined further since then so economists are expecting oil imports to fall in coming months.
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