US trade deficit narrows to $40.1 billion in August as exports climb to record level

In this March 14, 2014 photo, assembly line workers build a 2015 Chrysler 200 automobile at the Sterling Heights Assembly Plant in Sterling Heights, Mich. The Commerce Department reports on the U.S. trade deficit for August on Friday, Oct. 3, 2014. (AP Photo/Paul Sancya) (The Associated Press)

WASHINGTON – The U.S. trade deficit shrank for the fourth straight month in August, falling to the lowest level since January as exports rose to an all-time high.

The Commerce Department says the deficit dropped 0.5 percent in August to $40.1 billion, compared to a revised $40.3 billion in July.

Exports increased 0.2 percent to a record $198.5 billion, aided by increased sales of petroleum, telecommunications equipment and industrial engines. Imports also rose by a smaller 0.1 percent to $238.6 billion.

Even with the falling deficit the past four months, the imbalance so far this year is running 4.2 percent higher than the same period in 2013. A larger deficit acts as a drag on the economy because it means more money going to foreign companies.