(RTTNews) - With the value of U.S. exports showing a notable increase in July amid a modest drop in the value of U.S. imports, the Commerce Department released a report on Thursday showing that the U.S. trade deficit for the month narrowed by much more than anticipated.
The report showed that the trade deficit narrowed to $44.8 billion in July from a revised $51.6 billion in June. Economists had expected the trade deficit to narrow to $51.9 billion from the $53.1 billion originally reported for the previous month.
Paul Dales, Senior U.S. Economist at Capital Economics, said the narrower than expected trade deficit is "one more reason to believe that annualized third-quarter GDP growth will come in around 2.5 percent."
"With global demand clearly weakening, however, the prospects of net trade consistently and significantly supporting GDP growth are slim," he added.
A jump in the value of exports contributed to the narrower than expected deficit, with exports rising 3.6 percent to $178.0 billion in July from $171.8 billion in June. With the increase, the value of exports rose to a record high.
The increase in the value of exports was partly due to significant increases in exports of industrial supplies and materials, capital goods, and automotive vehicles, parts, and engines
Meanwhile, the value of imports showed a modest decrease for the month, edging down by 0.3 percent to $222.8 billion in July from $223.4 billion in June.
A notable drop in the value of petroleum imports contributed to the modest decrease in the total value of imports, with petroleum imports falling 6.5 percent to $35.5 billion amid a drop in crude oil prices.
The report also showed that the goods deficit narrowed to $60.6 billion in July from $67.0 in June, while the services surplus widened to $15.8 billion from $15.5 billion in the previous month.
The Commerce Department also said that the politically sensitive trade deficit with China widened to $27.0 billion in July from $26.7 billion in June. At the same time, the report showed narrower deficits with OPEC and the European Union.
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