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US Trade Deficit Shrinks to Smallest in Five Months

Exports of American goods saw an uptick in July, pointing to a strengthening economy despite fears of a global growth slowdown prompted by China’s recent currency devaluation.

U.S. exports of goods and services increased to $188.5 billion in July, up from $187.7 billion in June, the Commerce Department said on Thursday. And the total trade gap narrowed 7.4% in the month to $41.9 billion, the smallest deficit in five months.

Consumer goods exports—where apparel and textiles fall—however, decreased $0.4 billion in July.

U.S. exports to China fell 1.9% from June and imports from China were nearly flat, down less than 0.2%, leaving the U.S.-China trade deficit 0.4% bigger in July than in June at $31.6 billion.

Exports to the European Union fell 5.3%, and goods and services going to Canada were down 8.3% and could come under added pressure with the country’s current recession.

Year-to-date, the U.S. trade deficit increased 3.6%, exports decreased 3.5% and imports decreased 2.2%, but U.S. Secretary of Commerce Penny Pritzker sees July’s numbers as a positive.

“Today’s data shows that exports in nearly every major goods subsector have increased, and the demand for U.S. made goods remains strong,” Pritzker said Thursday. “Exports are critical to our nation’s economic growth and job creation, and U.S. companies continue to build and expand their businesses by exporting their world-class products and services to the 95 percent of potential consumers who live outside our borders.