US trade gap narrows to smallest in nearly three years

Philippine Tribune
Philippine Tribune
The US flag blows in the wind as cranes stand above cargo shipping containers on ships at the Port of Los Angeles in Los Angeles, California on June 7, 2023. (Photo by Patrick T. Fallon / AFP)

WASHINGTON, United States — An increase in exports helped to reduce the overall US trade deficit in August to the smallest since late 2020, according to government data released on Thursday.

The trade gap shrank to $58.3 billion, down nearly 10 percent from July’s revised figure of $64.7 billion, said the Commerce Department.

Analysts had expected a smaller change in deficit and the latest numbers showed exports rose $4.1 billion to $256 billion in August.

Imports slipped by $2.3 billion from July to $314.3 billion.

While consumer spending has helped to boost US trade, analysts have warned that this could weaken following steep interest rate hikes by the central bank over the past year — aimed at lowering inflation and cooling demand.

“Trade flows have slowed overall,” economist Rubeela Farooqi of High Frequency Economics told AFP.

“But quarter-to-date, exports are up and imports are down, suggesting some softening in domestic demand,” she added.

The labor market remains strong and households are still spending.

But Farooqi warned that there could be a slowdown in growth later this year if the job market cools “more materially,” weighing on demand for goods and services.

Meanwhile as global growth weakens, including in the United States’ major trading partners following monetary policy tightening, exports could take a hit as well.

In August, most of the rise in exports came from shipments of goods, in particular industrial supplies such as crude oil, according to the Commerce Department.

Imports of goods, fell on the back of a decline in consumer items and products such as semiconductors.

The goods deficit with China dipped $1.3 billion to $22.7 billion in August, with imports from the country dropping more than exports to it, data showed.

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