September 4, 2014 8:40 AM, EDT
Trade Gap Narrows to Six-Month Low
Tim Rue/Bloomberg News

The trade deficit in the U.S. narrowed in July to the lowest level in six months as exports climbed to a record.

The gap shrank 0.6% to $40.5 billion, the smallest since January, from a revised $40.8 billion in June that was narrower than previously estimated, the Commerce Department reported.

The median forecast in a Bloomberg News survey of 65 economists called for a widening to $42.4 billion. Sales to foreign customers climbed 0.9% on growing demand for American autos and petroleum products.

Sales of American products to countries such as Mexico, Brazil and the U.K. helped make up for slowing purchases from the European Union, one reason U.S. manufacturing has been picking up. Spurred by steady job growth, gains in consumer spending and business investment are also giving a lift to imports.

“The U.S. economy is doing better than almost any industrial country in the world,” Joel Naroff, president of Naroff Economic Advisors Inc. “It means we’re pulling more in from the rest of the world. It’s the consumer, it’s business investment.”

Bloomberg survey estimates for the trade gap ranged from deficits of $40 billion to $44.3 billion. The Commerce Department initially reported a $41.5 billion shortfall for June.

Exports climbed to $198 billion from $196.2 billion in June. Shipments of goods, including autos and non-petroleum products, were the highest on record.

Imports increased 0.7 % to $238.6 billion from $237 billion in the prior month as Americans bought more autos and crude oil.

Sales of U.S. petroleum products swamped purchases of foreign crude, leaving the trade gap on the fuel at the lowest level since May 2009.

After eliminating the effects of price fluctuations, which generates the numbers used to calculate gross domestic product, the trade deficit shrank to $48.2 billion, the smallest since December, from $48.9 billion in June.

The world’s largest economy grew faster than previously thought in the second quarter, rising at 4.2 % annualized rate, thanks in part to a smaller trade deficit.

The trade gap with China, the world’s second-biggest economy, climbed 2.7 % to a record $30.9 billion, the report showed.