A report released by the Commerce Department on Wednesday showed the U.S. trade deficit narrowed significantly in the month of July.
The Commerce Department said the trade deficit shrank to $70.6 billion in July from a revised $80.9 billion in June.
Economists had expected the trade deficit to narrow to $70.3 billion from the $79.6 billion originally reported for the previous month.
The trade deficit for July represents the smallest deficit since the $68.2 billion reported for last October.
The narrower deficit was largely due to a steep drop in the value of imports, which tumbled by 2.9 percent to $329.9 billion in July after edging down by 0.2 percent to $339.6 billion in June.
Imports of consumer goods led the way lower, although the sharp decline was partly due to a significant decrease in volatile pharmaceuticals.
The report also showed a notable decrease in imports of industrial supplies and materials, while imports of automotive vehicles, parts and engines saw considerable growth.
Meanwhile, the Commerce Department said the value of exports inched up by 0.2 percent to $259.3 billion in July after jumping by 1.7 percent to $258.8 billion in June.
Increases in exports of capital goods and automotive vehicles, parts and engines helped offset decreases in exports of foods, feeds and beverages and industrial supplies and materials.
“As things stand now, third quarter real exports are on track for a 13% annualized gain, with real imports shrinking by 2%,” said Paul Ashworth, Chief North America Economist at Capital Economics.
He added, “That means net trade will add close to 1.5% points to third-quarter GDP growth, which we forecast will be 3.0%.”
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