Higher exports of advanced technology goods, including software and computers, aircraft and cars took the shortfall on trade in goods and services down to $8.8bn, a stunning $2.4bn drop from the previous month's record deficit. Total exports reached their highest level ever, at $65.74bn.
The pleasant surprise sent the dollar from below 100 to 101 and from DM1.41 to nearly DM1.43, although it later retreated slightly.
Economists cautioned that it would be unwise to read too much into one month's figures. Most expect the gap to have widened again in September. Nevertheless, there is general agreement that the trend is favourable, with US exporters reaping the benefits of a weak dollar earlier this year.
''We are finally starting to see some trend improvement in the deficit,'' said Josh Feinman, an economist at Bankers Trust in New York. ''These figures provided the first palpable evidence of it.''
Lewis Alexander, chief economist at the Commerce Department, said: ''There is every reason to be optimistic.''
However, some economists sounded a note of caution about the improvement. Chris Iggo, an economist at Chase Manhattan bank, said: ''The deficit is at a much higher level than last year. It is going to be a long time before we see a substantial reduction.''
The most dramatic rise in exports in August was a $1.1bn jump in shipments of advanced technology goods. Exports of cars and car parts were up $850m, while civilian aircraft exports recovered by $318m from an unusually low level in July.
The politically sensitive bilateral trade deficit with Japan shrank for the fifth month in a row, to $5.12bn, thanks to higher US exports of computers and lower imports of Japanese cars. America's shortfall in trade with Mexico fell to $1.1bn, the lowest since the country's financial crisis broke out in January. The improvement in the US trade position would have become apparent earlier if it had not been disguised by the dive in exports to Mexico after the crisis.
However, the biggest improvement came in trade with Western Europe. The US deficit fell from an unusually high $3.1bn in July to $769m in August.
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