Marked Decrease in U.S. Trade Deficit in October

The U.S. foreign trade deficit narrowed markedly to $38.7B in October from $44.6B in September (revised from $44.0B).  Consensus forecasts had looked for a result unchanged from September.  Both exports and imports contributed to the narrowing;  exports surged 3.2% to $158.7B (up 14.9% year/year), while imports edged lower by 0.5% to $197.4B (+15.9% y/y).  In chained 2005 dollars, the deficit in goods decreased to $45.2B from $50.3B the month before; exports on that basis were up 11.3% year/year and imports, 13.0%.

Nominal exports of goods rose in every major end-use category in October.  The largest in dollar terms was industrial materials and supplies, up $2.6B, the largest monthly dollar gain ever in this category (data began in 1986); this amounted  8.1% (26.2% y/y).  Foods, feeds and beverages exports had the second-largest increase, $735M, also an 8.0% change from the prior month (26.1% y/y).  Capital goods increased 1.0% m/m, equivalent to 13.6% y/y.  Automotive sector exports were up 4.6% m/m and 22.4% y/y.  Consumer goods other than automotive and food rose 0.9% in the month and 2.4% on the year.  "Other" goods were up 2.6% in the month and 30.2% on the year. 

Imports were a mixed bag in October.  The decline in goods was $1.2B, 0.8% m/m (still up 17.5% y/y, though).  Food, industrial materials and capital goods were all down month-on-month, automotive was virtually flat and consumer and other goods increased.  Imports of petroleum were off 6.7% in the month (up 12.2% from a year ago), while non-petroleum imports edged up 0.4% (but +18.5% year/year).

Among services, exports rose 0.9% (8.3% y/y).  Travel, passenger fares, other transportation, royalties & fees and other private services all increased modestly.  U.S. government military sales contracts were the only services category to show a monthly decline.  Imports of services rose in October by 0.6% (8.0% y/y) with travel, passenger fares, royalties and "other" private services increasing, while other transportation, i.e., freight, and the U.S. government's services imports fell from September.

The goods deficit with China was $25.5B in October, down from $27.8B in September, but mildly wider than $22.7B in October 2009.  Exports jumped to $9.3B from $7.2B in September and $6.9B a year ago.  Imports, obviously much larger, actually eased slightly for a second consecutive month, down 0.5% to $34.8B from $35.0B; a year ago they were $29.6B.  As we examine these data we see that U.S. exports to China are firming up generally.  The absolute dollar numbers remain modest, but the percentage changes are substantial; October's year/year gain was 35.2%, capping a 12-month period when the smallest monthly gain from the comparable month the year before was 21.0% (June) and the largest was 65.9% (January).  [In the graph of the deficit with China, we have inverted the scale, so the decline in the October deficit appears as a downward movement in the series; scale inversion is a standard option in DLXVG3, Haver's proprietary graphics software.]

The international trade data can be found in Haver's USECON database. Detailed figures are available in the USINT database.

A balanced economic recovery across the globe was the subject of a recent presentation by Fed Chairman Bernanke at an ECB conference in Frankfurt.  The text of his presentation, along with his charts, can be found here.