March 1, 2021

U.S. Exports Rise to Record as Trade Deficit Shrinks

WASHINGTON — American manufacturers sold more cars, airplanes and industrial machinery in foreign markets in July, sending exports to a record high and pushing the trade deficit down to its lowest level in three months, the Commerce Department reported Thursday.

The trade deficit narrowed to $44.8 billion in July, down 13.1 percent from June, an improvement that reflected a 3.6 percent rise in exports to the record level of $178 billion. Imports dipped 0.2 percent to $126.9 billion as the bill for imported oil dropped 6 percent to $35.5 billion as crude oil prices fell.

The big jump in exports should provide critically needed support for growth at a time when the United States economy has been in danger of toppling into a recession.

Also Thursday, the Labor Department said the number of people seeking state unemployment benefits in the United States ticked up slightly last week, rising 2,000 to a seasonally adjusted 414,000.

The report suggested that companies were not significantly increasing layoffs, despite weak economic growth. But it also signals that little hiring was taking place. Applications need to fall below 375,000 to indicate sustainable job growth, economists say. They have not been below that level since February.

The four-week average, a less volatile measure, increased for the third straight week to 414,750, the government said.

Overall, the American economy grew at a meager 0.7 percent in the first six months of this year, the slowest growth since the recession ended two years ago. Economists are hoping for a modest rebound in growth in the second half of the year, some of it coming from stronger export sales, like those in July.

A narrowing trade deficit adds to economic growth because it means more products are being produced in the United States and less money is flowing into the hands of foreign producers to buy imports.

The United States trade deficit through July was running at an annual rate of $565.3 billion, 13.1 percent higher than last year’s imbalance of $500 billion.

For July, the American trade deficit with China rose 1.1 percent to $27 billion, the largest imbalance since September 2010. Through the first seven month of this year, the deficit with China is 10 percent higher than the same period in 2010, a year when the trade gap between the two nation’s hit a record high. The Obama administration has been applying pressure to China to allow its currency to rise more quickly in value against the dollar as a way of increasing U.S. exports to China and lowering Chinese imports to this country.

The deficit with Japan jumped by 30 percent in July to $5.3 billion, reflecting a sharp rebound in imports from Japan as that country’s factories resumed more normal production following the March 11 natural disasters. The curtailment of Japanese shipments to the United States restricted U.S. production in such areas as autos where American factories are dependent on getting component parts from Japan.

Oil imports declined because the volume of shipments fell along with the price. The average price of a barrel of imported crude oil dropped to $104.27 in July, down from $106 in June. Because oil prices have declined further since then, economists are expecting oil imports to continue to fall in coming months.

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