American manufacturers sold more cars, airplanes and industrial machinery in foreign markets in July, sending exports to an all-time high and pushing the trade deficit down to its lowest level in three months.
The U.S. trade deficit narrowed to $44.8 billion in July, down 13.1 percent from June, the Commerce Department reported Thursday.
The improvement reflected a 3.6 percent rise in exports to a record level of $178 billion, reflecting strong sales of a variety of manufactured goods. 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 U.S. growth at a time when the economy has been in danger of toppling into a recession.
The overall 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 to around 2 percent in the second half of this year. Some of that strength is expected to come from stronger export sales.
A narrowing trade deficit adds to economic growth because it means more products are being produced in the United States by U.S. workers and less money is flowing into the hands of foreign producers to buy imports.
The U.S. 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 U.S. 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 boosting U.S. exports to China and dampening Chinese imports to this country.
The U.S. 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 as did the price. The average price of a barrel of imported crude oil 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 in coming months.
The record for exports hit in July came after two months in which exports had fallen as global demand weakened.