Update: Trade Gap Shrinks - TheStreet

Updated from 10:13 a.m. EDT

The amount of goods U.S. companies sold abroad surged in August, narrowing the trade gap to its lowest level since February.

The

trade deficit

, a broad measure of the nation's international trade habits, fell to $29.44 billion in August, compared with a revised $31.69 billion deficit in July, the

Commerce Department

reported Thursday. Previously, the government

estimated July's trade gap at $31.89 billion.

August's figure was lower than expected, and could result in economists raising their

expectations for third-quarter

GDP

.

"Today's figures may be a blip, but this could also be the beginning of a sustained upswing in exports," said Bill Cheney, chief economist at

John Hancock Financial Services

. "Over the next year I expect Europe and Japan will pick up a bit, and our economy will slow down a bit, so the trade gap will probably continue to shrink."

Economists expected the August trade deficit to come in at $31.76 billion, according to

Reuters

.

Exports rose 3.6% to $93 billion, while imports rose 0.8% to $122.5 billion. The export growth was led by increases in capital goods, industrial supplies and automotive vehicles, parts and engines. The small rise in imports was led by an increase in capital goods.

For August, the U.S.' trade deficit with China -- its largest gap for a single country -- widened to $8.6 billion from $7.6 billion in July. However, the U.S.' deficits with Japan and Western Europe narrowed. With its European partners, the U.S. trade gap fell to $5.2 billion from $7.2 billion in July, while its deficit with Japan narrowed to $6.8 billion from $7.5 billion.

Economists expect the gap with China to narrow, as the country prepares to open its market to join the

World Trade Organization

, according to Cheney.

The U.S. trade deficit surged after the foreign financial crises of 1997 and 1998 that originated in Southeast Asia. Demand for U.S. exports fell, while, at the same time, the U.S. market was seen as a haven for Asian countries to export themselves out of crisis.

The U.S. has so far not seen the value of the dollar fall with the high trade deficits, as economic theory would predict. The dollar is the reserve currency of choice for many foreign governments, and the U.S. capital markets have attracted legions of foreign investors, keeping demand for dollars strong.