- Joel Naroff, chief economist at Naroff Economic Advisors
The US trade deficit shrank to the lowest level in five months in July, as exports rose marginally, while imports dropped. The shortfall narrowed to $41.9 billion in July, booking a 7.4% decrease from a June imbalance of $45.2 billion, according to the Commerce Department. Exports climbed 0.4% to $188.5 billion, driven by stronger sales of US-made autos and machinery, while imports declined 1.1% to $230.4 billion. So far this year, the deficit is running 3.6% above the 2014 level, reflecting weaker export sales. Concerns are mounting that US growth will be hurt by further decreases in exports, reflecting a stronger Dollar and overseas weakness, particularly in China. A precipitous slowdown in China has shacked financial markets in recent weeks as investors have become worried that weakness in the world's second largest economy could have a more adverse effect on global growth.
Meanwhile, a separate report showed initial claims for state unemployment benefits surged 12,000 to a seasonally adjusted 282,000 for the week ended August 29. The four-week moving average of claims, considered a better measure of labour market trends as it strips out week-to-week volatility, rose 3,250 to 275,500 last week. It was the 23rd consecutive week that the four-week average remained below the 300,000 threshold, which is usually associated with an improving labour market.
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