Rising exports helped the U.S. trade deficit shrink in October, relative to both September and last October, but still not quite as much as economists expected. The tightening trade gap suggests that global demand picked-up to start the third quarter and hints that the trade gap will contribute positively to gross domestic product to end the year.
Through the Commerce Department, the U.S. Census Bureau and the U.S. Bureau of Economic Analysis reported that exports in October totaled $192.7 billion and imports were $233.3 billion, equating to a trade deficit of $40.64 billion, compared to a shortfall of $42.97 billion in September. That’s a decline of 5.4 percent and the first contraction in the trade deficit in four months. Economists predicted the gap would narrow to $40.0 billion.
In October 2012, the trade deficit was $42.6 billion.
October exports rose to a record $192.7 billion from $189.3 billion in September. Imports increased by $1 billion to $233.3 billion, representing the highest level since March 2012.
Leading the way in a $3.5-billion increase in exports of goods in October from September was a $1.5-billion rise in industrial supplies and materials, followed by consumer goods (+$1.0 billion) and foods, feeds and beverages (+$600 million). Paring those gains was a $200 million decrease in automotive vehicles, parts, and engines.
The nation imported $800 million more in goods in October than September, paced by industrial supplies and materials (+$800 million) and consumer goods (+500 million). Decreases were seen in automotive vehicles, parts, and engines (-$1.0 billion) and capital goods (-$300 million).
For the month, the goods deficit dropped by $2.2 billion from September to $60.2 billion.
The services surplus increased $100 million from September to $19.6 billion.
Exports of services rose $400 million, mostly because of increases in private services ($+200 million). Import of services increased $300 million, primarily because of rises in passenger fares (+$100 million) and in travel (+$100 million).
The U.S.’s trade deficit with China narrowed by 5.3 percent to $28.9 billion on the back of a 36.1-percent surge in exports to a record $13.1 billion. Imports from China were up 4.6 percent to $41.92 billion, also a record level.
The U.S. neighbors to the north surprised with their international trade report on Wednesday. Statistics Canada said that the nation swung to a trade surplus of $75 million in October for a $330 million deficit in September. It was the first surplus in 22 months and shocked economists that called for a rise to a $770 million shortfall.
Canadian dropped 0.3 percent to $40.5 billion in October, while imports fell 1.2 percent to $40.4 billion.
The nation’s number-crunchers reported that exports to the U.S., Canada’s largest trade partner, were up almost 10 percent from October 2012. From September to October, Canada’s trade surplus with the U.S. was shaved by $200 million to $3.93 billion.