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December 11, 2009

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US trade gap shrinks as exports rise

THE United States trade deficit unexpectedly narrowed in October as exports surged to the highest level in nearly a year. Growing exports, boosted by a weaker dollar, are expected to boost demand for American manufactured goods in coming months and provide important strength to the overall economic recovery.

The US Commerce Department yesterday said the trade deficit fell to US$32.9 billion in October, 7.6 percent below a revised September deficit of US$35.7 billion. Economists had expected the deficit to increase to US$36.8 billion.

The improvement reflected a 2.5-percent jump in exports, led by strong gains in sales of American farm products, autos, aircraft and industrial machinery. Imports rose a smaller 0.4 percent, a gain that was held back by a big drop in oil imports.

The deficit with China rose 2.5 percent to US$22.7 billion, the highest level in nearly a year, even though US exports to China hit an all-time high.

Through the first 10 months of this year, the US trade deficit was running at an annual rate of US$364.8 billion, just half of the US$695.9 billion deficit for all of 2008. The lower trade deficit reflected the impact of America's deep recession, which cut consumer demand for domestic and foreign goods.

As the US economy pulls out of the downturn, the US trade gap is projected to rise in 2010.

However, American manufacturers will be helped by rising demand for their products in overseas markets, gains that will come from an improving global economy and the falling value of the dollar against many major foreign currencies, a development that will make American products more competitive in overseas markets.

For October, the 2.5-percent rise in exports pushed them to US$136.8 billion, the highest they have been since November 2008. It marked the sixth straight monthly gain in exports, reflecting a gradual recovery in overseas economies and a decline in the value of the dollar since it hit a peak for this year in March.

Imports edged up a smaller 0.4 percent to US$169.8 billion. The gain reflected increases in shipments of foreign cars, computers and consumers goods, including clothing, televisions and household appliances.


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