The U.S. trade deficit shrank slightly in July as a weaker dollar fueled demand for American products, including machinery, aircraft and automobiles, reported Bloomberg News. The gap shrank 0.3 percent to $59.2 billion, from $59.4 billion in June, the Commerce Department announced today. Economists had predicted the deficit would be $59 billion.

Exports in July rose 2.7 percent to $137.7 billion, while imports rose 1.8 percent to a record $196.9 billion. Higher purchases of crude oil, drilling equipment and household goods drove the increase in imports.

The dollar is down 7.9 percent from the beginning of 2006 against an average of several currencies, and economies are growing faster overseas, aiding an increase in U.S. exports. China’s economy was up 11.9 percent in the second quarter, compared with a year earlier, and India grew at a 9.3 percent rate. Argentina’s economy is projected to expand by more than 8 percent this year.

Still, the trade gap with China, the second-largest U.S. trading partner after Canada, rose 13 percent to $23.8 billion in July, the second highest monthly total, compared with a record $24.4 billion in October 2006.