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Ahead of the Bell: US trade gap

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November 14, 2013 06:19 AM EST | AP

WASHINGTON (AP) — The Commerce Department reports on the trade deficit for September at 8:30 a.m. EST Thursday.

SLIGHTLY WIDER: Economists expect the deficit to widen slightly to $39 billion, according to a survey by FactSet.

WIDENING DEFICIT: The deficit has been widening since it hit a four-year low in June.

WHY IT MATTERS: This year's trade deficit is running about 11 percent below last year's deficit. That is a positive sign for economic growth. A smaller trade deficit acts as a boost to economic growth when it shows American companies are earning more in their foreign sales and losing fewer domestic sales to foreign competitors.

The overall economy grew at an annual rate of 2.8 percent in the July-September quarter and an improving trade deficit contributed 0.3 percentage point to growth during that period.

Many economists say that growth has slowed in the current October-December quarter to perhaps below a 2 percent growth rate. They expect a rebound next year as the impacts of this year's tax hikes and government spending cuts lessen.

The Obama administration on Oct. 30 released its latest report on whether countries are manipulating their currencies to gain unfair trade advantages.

The Oct. 30 report said that China's currency, the renminbi, remained significantly undervalued but it declined to label China as a currency manipulator. Such a designation triggers negotiations and could ultimately lead to U.S. trade sanctions.

The currency report also criticized Germany, saying its large trade surpluses were holding back growth in Europe. The twice-a-year report also said the administration planned to closely monitor the currency policies of Japan and South Korea.