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With the value of exports showing a modest increase amid a drop in the value of imports, the Commerce Department released a report Friday morning showing that the U.S. trade deficit unexpectedly narrowed in the month of August.
The report showed that the trade deficit narrowed to $30.7 billion in August from a revised $31.9 billion in July. Economists had been expecting the deficit to widen to $33.0 billion compared to the $32.0 billion originally reported for the previous month.
An increase in exports contributed to the unexpected decrease in the size of the trade deficit, with the value of exports edging up 0.2 percent to $128.2 billion in August from $128.0 billion in July. The modest growth was largely due to a 0.5 percent increase in service exports.
With the increase, the value of exports increased for the fourth consecutive month, rising to their highest level since December of 2008.
Commenting on the data, Peter Boockvar, equity strategist for Miller Tabak, said, "Exports are of course a key component in determining the pace of U.S. economic growth in terms of helping to soften (can't completely offset) the impact of reduced U.S. consumer spending."
"We need to make more of the stuff the rest of the world wants, whatever that might be," Boockvar added.
At the same time, the report showed that the value of imports fell 0.6 percent to $158.9 billion in August from $159.8 billion in July. The drop in the value of imports was due in large part to a decrease in the value of crude oil imports.
The Commerce Department also said that the goods deficit narrowed to $41.9 billion in August from $42.8 billion in July, while the services surplus widened to $11.2 billion from $10.9 billion in the previous month.
Additionally, the report showed that the politically sensitive trade deficit with China narrowed to $20.2 billion in August from $20.4 billion in July.
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