The U.S. trade deficit narrowed more than expected in August as exports increased solidly, likely positioning trade to support economic growth in the third quarter.

The trade deficit contracted 9.9% to $58.3 billion, the lowest level since September 2020, the Commerce Department said on Thursday. Data for July was revised to show the trade gap rising to $64.7 billion instead of $65.0 billion as previously reported. Economists polled by Reuters had forecast the trade deficit shrinking to $62.3 billion in August.

Exports of goods and services increased 1.6% to $256.0 billion. Goods exports shot up 1.8% to $171.5 billion, with shipments of capital goods hitting a record high. But exports of foods, feeds and beverages were the lowest since August 2020. At $84.5 billion, exports of services were the highest on record.

WORLD TRADE ORGANIZATION CHIEF WARNS AGAINST TRADE FRAGMENTATION TRENDS

Shipping containers, including one labelled “China Shipping” and another “Italia”, are stacked at the Paul W. Conley Container Terminal in Boston, Massachusetts, on May 9, 2018. (REUTERS/Brian Snyder)

CLICK HERE TO GET THE FOX NEWS APP

Imports of goods and services fell 0.7% to $314.3 billion. Goods imports dropped 0.9% to $256.0 billion, potentially flagging softening domestic demand amid higher borrowing costs.

The services surplus at $26.2 billion was the highest since March 2018. Trade made no contribution to the economy’s 2.1% annualized growth rate in the second quarter.