Weak dollar cuts US trade deficit

The weak dollar is helping US exporters

The US trade deficit has narrowed to its lowest level in more than two years, driven by record exports boosted by the weaker dollar.

The difference between what the US exports and imports shrank to $56.5bn (£27bn) in September, down 0.6% from August's revised $56.8bn.

Exports of goods and services rose 1.1% in September to a record $140.1bn, said the Commerce Department.

As the dollar has hit record lows, it has made US exports more competitive.

US food

The exports were led by US food products, cars and industrial and consumer goods.

With domestic spending growth expected to slow sharply...strong export growth is crucial to keep the US economy moving forward

Imports climbed 0.6% to $196.6bn, with imports of factory equipment and other capital goods, cars and consumer products rising alongside the higher cost of imported oil, caused by increased crude prices.

The resulting deficit was the lowest since May 2005.

The latest Commerce Department figures will be a welcome boost for both the White House and Federal Reserve, as the domestic US economy is showing increasing signs of slowing towards the end of the year.

"With domestic spending growth expected to slow sharply as housing continues to decline and consumers wilt under pressure...strong export growth is crucial to keep the US economy moving forward," said Nigel Gault, US economist at Global Insight.