US trade deficit in Aug rises 3 percent to $40.7 billion

The U.S. trade deficit rose in August as a flood of imports offset the best showing for exports in 13 months. The politically sensitive deficit with China rose to the highest level in 11 months. The trade deficit increased 3 percent to $40.7 billion, up from a gap of $39.5 billion in July, the Commerce Department reported yesterday.

Imports jumped 1.2 percent to $228.6 billion, reflecting big increases in shipments of foreign oil, autos and commercial aircraft. Exports were up 0.8 percent to $187.9 billion, the fourth straight monthly increase and the highest level in 13 months.

Analysts are hopeful that export sales will pick up after a rough two years when American producers had to battle a rising dollar that made their products costlier overseas. "Exports are beginning to show signs of life as the drag from the dollar's surge in 2014 and 2015 begins to fade," said Paul Ashworth, chief U.S. economist at Capital Economics. He predicted that the rise in exports would contribute to overall growth in the July-September quarter.

The deficit with China increased 3.5 percent to $33.9 billion, the highest level since September 2015. So far this year, America's deficit with China, the largest with any single country, is running 5.7 percent below last year's level.