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U.S. trade gap narrows in August on lower oil prices

WASHINGTON - Falling oil prices helped narrow the U.S. trade deficit in August, while both exports and imports retreated from records set in July, the U.S. Commerce Department said on Friday.

The trade gap shrank 3.5 percent to $59.1 billion from a downwardly revised estimate of $61.3 billion in July. Analysts surveyed before the report had forecast the August trade gap to shrink to $58.8 billion.

Exports fell 2.0 percent in August, the biggest one-month drop in more than four years, but were still the second-highest on record at $164.7 billion. Exports of capital goods and petroleum set records in August.

Imports fell 2.4 percent to $223.9 billion, also the second-highest on record. Imports of consumer goods and food, feeds and beverages set category records.

Investors remained primarily focused on government efforts to stem the global financial crisis that has shaken markets badly this week.

The United States' monthly oil import bill fell to $37.0 billion in August after rising in each of the five previous months. The average price for imported oil dropped to $119.99 per barrel from the record set in August of $124.66. That was the first month-to-month drop since February 2007.

Meanwhile, a Labor Department report on Friday showed oil import prices dropped another 9 percent in September.

That was the chief factor in a 3.0 percent drop in overall import prices last month, the biggest one-month decline in 5 years, the department said.

U.S. export prices dropped 1.0 percent in September, the second consecutive decline after rising for 21 consecutive months, the department said.

Imports of foreign car and car parts were the lowest since March 2005 in a sign of weak demand for big-ticket goods. Imports from Germany took the biggest tumble, followed by Japan. Canada and Mexico showed gains in the United States.

Overall imports from Japan dropped 7.0 percent in August to $11.1 billion, helping to push the U.S. trade gap with that country to the lowest since May 2003. U.S. exports to Japan rose 12.8 percent during the month to $6.4 billion.

Imports from China rose slightly to a record $31.8 billion, pushing the U.S. trade gap with that country to $25.3 billion, the highest since October 2007.