By Josh Mitchell and Ben Leubsdorf

WASHINGTON-The U.S. trade deficit contracted sharply in September as foreign companies snapped up American-made goods, helping the economy rebound from an ugly first half of the year.

The trade gap in goods and services shrank 9.9% from a month earlier to a seasonally adjusted $36.44 billion, the smallest deficit since February 2015, the Commerce Department said Friday. Exports rose 0.6% while imports decreased 1.3%.

The gap was smaller than the projected $37 billion deficit in a Wall Street Journal survey of economists. The positive development mainly reflected higher sales abroad of products like airplanes, industrial engines and artwork.

The decline in imports reflected lowerpurchases in the U.S. of foreign goods like civilian aircraft and pharmaceutical products. Imports also fell because a temporary factor: Olympic broadcast rights had boosted charges for the use of intellectual property in August.

The rise in exports is the latest sign U.S. manufacturers are regaining stability after a choppy year marked by weak business spending at home, a strong dollar and sluggish demand abroad.

Trade between the U.S. and other nations has slumped over a broader period due to weakness in the global economy. U.S. exports fell 3.5% in the first nine months of the year compared to the same period in 2015. Imports dropped 3.3%. The U.S. trade gap has declined 2.5% this year.

Friday's report suggests the outlook improved in recent months and that the economy entered the final quarter on solid footing. The government estimated earlier this month that U.S. gross domestic product-the broadest measure of goods and service produced across the economy-grew at a 2.9% annual rate from July through September, the fastest in two years. A rebound in exports was one of the biggest factors behind the growth.

It's not clear whether the latest export boost will last. One factor behind the third-quarter bounce was higher sales of soybeans, tied to record harvests in the U.S., crop shortfalls in South America and solid demand in places like China. Soybean exports fell by $2 billion in September from a month earlier, according to Friday's report.

Other signs point to stability in the manufacturing sector. A key index of manufacturing activity rose in October, the trade group Institute for Supply Management said earlier this week. The group cited improving conditions in the global economy.

The Commerce Department report on trade can be found at http://www.census.gov/ft900.

Write to Josh Mitchell at joshua.mitchell@wsj.com and Ben Leubsdorf at ben.leubsdorf@wsj.com.

(END) Dow Jones Newswires

November 04, 2016 08:45 ET (12:45 GMT)

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