U.S. trade deficit falls as exports rise for sixth straight month
A Bloomberg News economists survey had expected the trade deficit to total $36.4 billion in October. It hit a revised $35.7 billion in September, down from the previously released $36.5 billion.
In October, imports rose $700 million, or by just 0.4%, to $169.8 billion. Exports, led by increased sales of capital goods and consumer goods, rose $3.5 billion, or by 2.6%, to $136.8 billion.
Further, for the first 10 months of 2009, the trade deficit totaled $304 billion, down substantially from $610.8 billion in the same period in 2008.
October's trade deficit decline was also aided by a smaller bill for oil imports, which declined to $17.8 billion from $20.5 billion in September. The non-petroleum trade deficit also fell to $25.2 billion in October from $25.7 billion in September.
The U.S. trade deficit in October with key nations was as follows: China, $22.7 billion, up from $22.1 billion in September; European Union, $4.9 billion, down from $5.5 billion; Canada, $2.0 billion, up from $1.5 billion; and Mexico, $4.6 billion, flat compared to September.
The U.S. registered trade surpluses in October with Hong Kong, $1.6 billion, down from $1.9 billion in September; Australia, $1.3 billion, up from $900 million; Singapore, $900 million, up from $300 million; and Egypt, $400 million, up from $300 million.
The nearly two-year recession, which appears to have ended in Q3, has led to one long-term benefit for the U.S. economy: a likely yearly decrease in the trade deficit -- which results in a smaller loss of U.S. wealth to foreign sources.
Economists prefer that a nation run a trade surplus as opposed to a trade deficit, as it usually implies that a nation's goods are competitive on the world stage, its citizens are not consuming too much, and it's amassing capital for future investment and economic goals.
In general, it was another decent monthly trade report. Exports continue to rise, aided by the weak dollar. Assuming a moderation in oil prices, and continued export demand for U.S. machinery, the trade deficit decline should continue in Q4, and into 2010, aided by the global economic recovery. Further, if the U.S.'s "frugal consumer" stance continues in 2010, there's even the chance that the U.S. could start registering monthly trade surpluses in late 2010 -- something economists and business executives would cheer, due to the wealth and domestic jobs that would stem from it.