US trade deficit narrows sharply in August

The U.S. trade deficit narrowed sharply in August as exports increased and imports fell, suggesting that trade could be a small drag on economic growth in the third quarter.

The trade gap contracted 10.8% to $70.4 billion from a revised $78.9 billion in July, the Commerce Department's Bureau of Economic Analysis said on Tuesday. Economists polled by Reuters had forecast the trade deficit would narrow to $70.6 billion from the previously reported $78.8 billion in July.

Trade has subtracted from gross domestic product for two straight quarters. Growth estimates for the third quarter are currently as high as a 3.2% annualized rate. The economy grew at a 3.0% pace in the April-June quarter.