The Commerce Department reported Tuesday that the U.S. trade deficit expanded by 4.9 percent in October to $42.2 billion as a larger drop in exports of manufactured goods outpaced shrinking import levels.  At the same time, the agency revised September’s trade gap downward to $40.3 billion from the previously reported $41.6 billion.  A widening trade gap hamstrings growth in the nation’s economy as it reflects fewer sales of U.S. products overseas and greater spending on foreign products.

Economists were expecting the trade deficit to rise to $42.6 billion for October.

Exports of goods and services contracted by 3.6 percent to $180.5 billion during the month, the largest drop since January 2009, marking the lowest level since February.  The impact of the summer drought impacted soybean sales, which jettisoned by $1.13 billion in October.  The weak export figures do not bode well for growth expectations in the U.S. for the fourth quarter.

Although exports to the European Union, the second largest export market for the U.S., increased by 1.4 percent in October, the totals compared to the same time last year are down by 0.7 percent.

Imports declined by 2.1 percent to $222.8 billion, the lowest level since April 2011, with declining figures from a many sectors, including clothing, autos, cell phones, chemicals and machinery.  A surge in cell phone markets during September coincided with the release of the latest Apple (AAPL) products, but a sting was felt in October with a sharp drop in cell phone imports of $1.32 billion.

Paring the decline in imports was crude oil with a surge to $26.2 billion from $24.1 billion.

The three-month average of the trade deficit, which smooths volatility, expanded tepidly from $41.5 billion to $41.7 billion.

The trade gap with China hit record levels by growing from $29.1 billion in September to $29.5 billion in October.

On the other side of the coin, trade surpluses with South America, Central America and Brazil hit all-time highs.  Fewer travelers from foreign countries booked flights to the States, leading to a slight decline in the services surplus to $16.9 billion.