U.S. Trade Deficit Hits Record Low Amid Export Boom

The U.S. trade deficit sharply narrowed in August, reaching a five-month low. Record-high exports contributed to this decline, suggesting minimal impact on third-quarter economic growth. The data indicates the economy remains strong, likely influencing Federal Reserve's decisions on interest rates.

In August, the U.S. trade deficit saw a substantial reduction, hitting its smallest figure in five months amid a surge in exports. The Commerce Department's latest report indicates that the trade gap contracted by 10.8% to $70.4 billion from July's revised $78.9 billion, fueled by record-high exports reaching $271.8 billion.

The narrowed trade deficit signals the persistent strength of the U.S. economy, supported by positive labor market and consumer spending data. Despite the impressive export figures, the Federal Reserve is not expected to adjust its plans on interest rate cuts significantly, maintaining stability in monetary policy measures.

The impressive rise in exports was bolstered by an increase in capital goods, industrial supplies, and automotive exports, while semiconductors saw a decline. The reduction in the trade deficit did not significantly alter GDP growth, with estimates for third-quarter growth reaching up to 3.2% annually.

(With inputs from agencies.)