WASHINGTON (AFP) - The US trade gap shrank unexpectedly in September as exports hit a record high, offering hope the weakening dollar is finally mopping up red ink.
With China alone, however, the deficit bulged to a new record.
The overall US trade gap narrowed to a seasonally adjusted 51.6 billion dollars in September from 53.5 billion dollars in August.
Many analysts had predicted no change.
"The report is suggesting past weakness in the US dollar is starting to improve the US trade balance," said BMO Financial Group senior economist Sal Guatieri. As the dollar retreated, the euro smashed above 1.30 dollars for the first time Wednesday.
"We could be seeing the beginning of a turnaround in the US trade deficit," he said.
"It has generally been deteriorating steadily in recent years."
Exports of goods and services rose 0.8 percent from the previous month to an unprecedented 97.5 billion dollars, helped by demand for US-made food, industrial supplies and consumer goods.
Imports fell 0.8 percent to 149 billion dollars as US demand for foreign-made industrial supplies eased.
Compared to a year earlier, imports were up 13.3 percent while exports had surged 17.1 percent, a "striking" performance, said Moody's Investors Service chief US economist John Lonski.
"Maybe what happened in September is that the better-than-expected showing by the US trade deficit offers a hint regarding how the dollar exchange rate depreciation will eventually narrow the trade deficit," Lonski said.
A lower dollar makes US-made goods and services relatively cheaper for buyers using foreign currency, and foreign-made imports relatively more expensive for US consumers.
"Any time soon, we could see changes of a sort where exports start to outrun imports sequentially, which would have the effect of narrowing the trade imbalance," Lonski said.
A breakdown of the raw, unadjusted, data showed:
-- With China, where the yuan's value is fixed to the dollar, the US deficit increased 0.9 percent to a record 15.5 billion dollars.
"China represents the United States' fastest growing export market so the US has to approach the trade situation with China with a good deal of care, in order not to discourage the Chinese from buying US exports which they have been purchasing at a very rapid clip," Lonski said.
-- The US shortfall with Japan eased 5.3 percent to 6.1 billion dollars.
-- The gap with the 25-nation European Union contracted 19.8 percent to 7.7 billion dollars.
-- In trade with Canada, the deficit shrank 11.8 percent to 5.3 billion dollars.
-- With members of the Organization of Petroleum Exporting Countries (OPEC), the deficit narrowed 4.4 percent to 6.7 billion dollars.
The bill for imported crude oil fell 600,000 dollars to 11.4 billion dollars as hurricanes in the Gulf of Mexico disrupted imports.
The United States imported 10.12 million barrels of petroleum a day, the lowest since February.
The price of imported oil rose 1.25 dollars to a record 37.62 dollars a barrel.
11/10/2004 - 16:59 GMT - AFP