The U.S. trade deficit narrowed in July

The gap shrank 0.3 percent to $59.2 billion from a revised $59.4 billion in June that was bigger than previously estimated, the Commerce Department said today in Washington. Economists anticipated a shortfall of $59 billion. Exports rose to a record.

The imbalance is unlikely to worsen as growing economies overseas and a cheaper dollar fuel demand for American-made machinery, aircraft and automobiles. U.S. purchases of foreign goods may cool as the housing slump lingers and credit restrictions make it more difficult to borrow, economists said.

The trade gap was forecast to widen to $59 billion, from an initially reported $58.1 billion, according to the median estimate of 70 economists surveyed by Bloomberg News. Projections ranged from deficits of $57.5 billion to $61.5 billion.

The inflation-adjusted gap, used to calculate growth, shrank to a three-year low.July exports increased 2.7 percent, the most since March 2004, to $137.7 billion, as sales of aircraft, automobiles and telecommunications equipment strengthened. Imports rose 1.8 percent to $196.9 billion, also a record.

Treasury securities extended declines after the report. The yield on the benchmark 10-year note rose to 4.36 percent at 8:49 a.m. in New York, compared with 4.32 percent later yesterday.

The U.S. trade deficit narrowed in July, Bloomberg
9/11/2007 6:02:48 AM