The gap in July was smaller than the forecast of about $47 billion by analysts, who suggested that there might be a cooling off in growth as companies slowed the rebuilding of their inventories and as the impact of other factors, like the government’s fiscal stimulus measures, faded away.  Analysts said the outlook for growth depended on whether consumer demand picked up in the months ahead — a major question mark given the weak job market.  Joshua Shapiro, the chief United States economist for MFR, said that while the monthly figures could be volatile, the underlying trend suggested the July data would be a neutral factor on economic growth.  “With the boost from the inventory swing fading, final demand growth will be increasingly important in driving trade flows,” Mr. Shapiro said. “As such, the underlying growth rates of both imports and exports ought to moderate in coming months.”  The July figures showed that the United States had trade surpluses with Hong Kong, Singapore, Australia and Egypt.  The trade deficit with China — America’s largest with a single country — was $25.9 billion in July, slightly less than the $26.2 billion in June.  United States trade with China carries political freight, especially as it relates to its exchange rate. The Obama administration has been hoping China follows through with its pledge to let the renminbi fluctuate against the dollar. Economists and American politicians have said that the currency’s value, if stronger, could ease Chinese exporters’ advantage over American manufacturers.  “If that did happen it would be a factor to rebalance the widening trade gap with China,” said Robert A. Dye, the senior economist PNC Financial. That in turn would trickle in to G.D.P.  “We have an unsustainable trade imbalance with China,” he said.  The United States also had trade deficits with the European Union, the Organization of the Petroleum Exporting Countries, Mexico, Japan, Germany and other countries.  Thomas J. Duesterberg, president of the Manufacturers Alliance/MAPI, a public policy and economics research organization, said manufacturers were expected to benefit from a marginally weaker dollar against some currencies, and from strong growth in the developing world, including China, India and Brazil.  American manufacturers are maintaining their competitiveness by keeping costs under control, including unit labor costs, he said.  “Exports are a source of strength for the manufacturing sector, and we anticipate that they will continue to be a source of strength,” Mr. Duesterberg said.  Chemicals, plastics, capital goods, semiconductors and medical equipment were among the export categories showing year-on-year improvements.  Still, the American trade deficit with the European Union expanded in July, to $9.9 billion, from $7.8 billion.  “Europe is growing but it is growing weakly,” Mr. Duesterberg said. “If Germany were not growing as strong as it was, then we would see even weaker sales. What would help U.S. exports even more is if the southern tier of Europe were growing a little bit more strongly, and that could pull in exports.”  Concerns over European debt, especially in Spain, Portugal, Ireland, Italy and Greece, surfaced earlier this year and continue to be felt in economic and financial markets.  Steven Ricchiuto, a chief economist for Mizuho Securities USA, said the decline in imports suggested that American consumers were still focused on increasing savings rather than on spending.  Mr. Dye said after a lackluster back-to-school season, retailers would probably experience only modest improvements in the holiday season sales compared with last year.  A version of this article appears in print on September 10, 2010, on Page B8 of the New York edition with the headline: U.S. Trade Deficit Narrowed in July as Exports Rose. Order Reprints| Today's Paper|Subscribe
The 14 percent decline in the trade deficit in July should give a lift to overall economic growth.