By Ben Leubsdorf
WASHINGTON--The U.S. trade gap narrowed in August as exports
increased, a sign of stronger foreign demand for American-made
goods that could help boost economic growth in the just-ended third
quarter.
The trade deficit declined 0.5% to a seasonally adjusted $40.11
billion in August from the prior month's revised deficit of $40.32
billion, the Commerce Department said Friday. Economists surveyed
by The Wall Street Journal had expected the trade deficit would
widen in August to $41 billion.
Exports increased 0.2% from July to $198.46 billion, and imports
rose 0.1% to $238.57 billion. Exports rose 4.1% in August from a
year earlier, and imports rose 3.7% on the year.
A narrower trade gap can be a boon to economic growth if it
signals stronger demand overseas for the goods and services
produced by U.S. firms. An increase in exports provided a big boost
to the economy in the second half of 2013, but foreign trade has
been a drag on growth so far this year, according to Commerce
Department estimates.
The third quarter ended Tuesday. The Commerce Department will
release its first official estimate for gross domestic product, the
broadest measure of output across the economy, on Oct. 30.
Some economists expect stronger growth based on the trade data,
as well as September's robust job growth. Macroeconomic Advisers on
Friday boosted its estimate for third-quarter GDP to growth at a
3.3% seasonally adjusted annual rate, up from 2.8%. Morgan Stanley
boosted its estimate to growth at a 3.3% pace, up from 2.9%.
Capital Economics projected 3.5% growth, with the
stronger-than-expected trade data offsetting weaker-than-expected
construction-spending data released Wednesday.
The U.S. trade deficit has been falling for four straight
months. In August, exports of capital goods, consumer goods and
industrial supplies and materials all rose, while exports of food
and autos declined. Imports of capital and consumer goods rose from
July, while auto imports fell.
U.S. imports from Germany hit a record in August, and U.S.
exports to Japan were at their highest level since March 1996.
Those figures weren't adjusted for seasonal variation.
In a testament to the domestic energy-production boom, U.S.
petroleum exports were the highest on record in August and
petroleum imports were the lowest seen since November 2010. The
nation's seasonally adjusted petroleum trade deficit was at its
lowest level since July 2004.
"If the recent trend continues, the U.S. will be a net oil
exporter in just three years' time," Pantheon Macroeconomics chief
economist Ian Shepherdson said in a note to clients.
One potential worry: The U.S. dollar has been rising for three
months against a broad basket of world currencies. A stronger
dollar makes U.S. goods more expensive overseas and could dent
export growth. William Dudley, president of the Federal Reserve
Bank of New York, warned last month that a sharp rise in the dollar
could have "consequences for growth."
But that hasn't happened yet. "The August trade report shows the
opposite -- despite the strengthening of the trade-weighted dollar
this year, real exports have risen 10.9% at an annual rate over the
last three months, while real imports have fallen 2.2%," RDQ
Economics co-founders John Ryding and Conrad DeQuadros said in a
note to clients.
Write to Ben Leubsdorf at ben.leubsdorf@wsj.com