·
The U.S. foreign trade deficit in October dropped to the lowest level
since July of 2005. The $58.9B shortfall compared to an unrevised $64.3B
during September and was shallower than Consensus expectations for a
deficit of $63.0B.
· A seven dollar m/m drop in the cost of a barrel of crude oil to $55.47 from $62.52 in September helped imports of petroleum products to fall 13.5% (-12.7% y/y). The quantity of all energy related petroleum products also fell 3.3% (-7.5% y/y). In November crude oil prices recouped about half of the October decline.
· The falloff in
petroleum lowered overall imports of goods & services in October by
2.7% m/m. In addition, imports of nonpetroleum products fell for the
second month. The 0.7% (+6.7% y/y) drop reflected a second decline in
capital goods imports (10.0% y/y) and a 1.6% (-0.1% y/y) falloff in automotive
vehicles & parts. Working in the other direction, nonauto consumer
goods imports rose 0.6% (10.9% y/y) while imports of advanced technology
products surged (14.6% y/y).
· Total exports rose just 0.2%, the smallest gain in three months, held back by a 0.7% (+2.5% y/y) decline in automotive and a slim 0.1% (14.3% y/y) rise in capital goods exports. Exports of complete civilian aircraft slipped (+38.9% y/y) but aircraft parts & engines were firm. Computer exports surged 15.4% (14.4% y/y) but exports of telecommunications equipment slipped 2.7% (+15.9% y/y). Exports of nonauto consumer goods recovered September's drop and jumped 3.6% (17.3% y/y).
· Service exports
jumped 1.2% (7.8% y/y) as travel exports recovered the September decline
with a 1.2% (5.2% y/y) increase and passenger fares firmed 1.3% (-1.0%
y/y). Imports of services rose 0.8% (8.6% y/y) reflecting strength in
travel (7.2% y/y) and passenger fares (3.7% y/y).
· The U.S. trade deficit in goods with China deepened to another record of $24.4B in October ($201.5B in 2005) though exports surged 6.6% (25.2% y/y) but imports rose 6.2% (20.2% y/y). The balance of goods trade with the newly industrialized Asian countries nearly tripled m/m to a deficit of $1.6B (-$15.8B in 2005) as exports fell 4.9% (+8.1% y/y) and imports rose 5.2% (7.4% y/y).
· The lower value of the dollar helped US exports to Europe jump another 3.0% (20.8% y/y). Imports just recovered a September decline with a 10.2% (2.9% y/y) rise. Exports to Germany surged 6.8% (35.8% y/y) and the 9.3% gain in imports (-2.2% y/y) didn't recover a 12.9% September decline.
· Truths About Trade and the Dollar from the Federal Reserve Bank of Minneapolis is available here.