U.S. exports rose to a record high in July, pushing the trade deficit down to its lowest level in three months, while the number of Americans seeking unemployment benefits rose slightly last week, signaling that the job market is not improving, the government said in two reports Thursday.
The Commerce Department reported that the trade deficit narrowed to $44.8 billion in July, down 13 percent from the previous month. The improvement resulted from a 3.6 percent increase in exports to a record high of $178 billion, reflecting strong sales of a variety of manufactured goods, including cars, airplanes, and industrial machinery. The jump in exports should support overall U.S. growth at a time when the economy has been at risk of falling back into recession.
Imports fell 0.2 percent to $126.9 billion, largely due to costs of imported oil falling 6 percent to $35.5 billion as crude prices declined. Oil imports fell because the volume of shipments fell as well as prices. The average price of a barrel of imported crude dropped to $104.27 in July, down from $106 in June. Oil prices have declined further since then, so economists are expecting oil imports to fall in coming months.
For the first seven months of the year, the trade deficit was running at an annual rate of $565.3 billion, 13 percent higher than last year's imbalance of $500 billion.
In July, the politically sensitive trade deficit with China rose 1.1 percent to $27 billion, the biggest imbalance since September 2010. Through the first seven months of this year, the deficit with China is 10 percent higher than the same period in 2010, a year when the trade deficit between the world's two biggest economies hit a record high.
The U.S. trade deficit with Japan jumped by 30 percent in July to $5.3 billion, reflecting a sharp rebound in imports from the country as Japanese factories resumed normal production following the March natural disasters.
Meanwhile, the Labor Department reported that weekly applications for jobless benefits rose 2,000 to 414,000, suggesting little hiring. The data also suggests that companies are not significantly increasing layoffs despite weak economic growth.
The four-week moving average of jobless claims, considered a more reliable indicator of labor trends, increased for the third consecutive week to 414,750.
The government said last week that employers added no net jobs in August, the worst month for hiring since September 2010, and the unemployment rate was steady at 9.1 percent for the second consecutive month.