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Economy in Brief

U.S. Trade Deficit Widened Unexpectedly
by Tom Moeller December 14, 2005

The October U.S. foreign trade deficit widened to a record $68.9B from a little revised $66.0B in September. Consensus expectations had been for a narrowing to $62.5B.

In the wake of Hurricanes Katrina & Rita imports of petroleum products, notably gasoline, surged 23.3% on top of a 27.9% September jump to a level nearly double last October's and up nearly four-fold from the 2003 monthly average.

That spike lifted overall imports by 2.7% for the second consecutive month, despite a decline in crude oil prices to $56.29 per bbl. and petroleum prices overall that were roughly flat m/m.

Imports of nonauto consumer goods were strong as well and posted a 1.2% rise (9.7% y/y), goosed additionally by a 3.9% (7.0% y/y) rise in automotive imports. Capital goods imports fell 0.3% (+7.8% y/y) but imports of advanced technology products jumped 4.9% (NSA, 7.7% y/y).

Total exports gained back most of the prior month's 2.4% collapse with a 1.7% jump. Capital goods exports rose 6.2% (9.8% y/y) with the end of the four-week strike at Boeing Co. that drove exports of civilian aircraft up nearly three-fold m/m (33.1% y/y). Exports of advanced technology products also rose a strong 10.4% (NSA, 6.6% y/y). Exports of capital goods overall rose a strong 6.2% (9.8% y/y) although consumer goods exports fell 5.6% (+5.8% y/y).

Services exports were about flat m/m (+10.4% y/y) as private travel fell 1.8% (+12.5% y/y) though "other" private transportation services rose 1.2% (14.3% y/y).

The US trade deficit with China widened to another record of $20.5B ($161.9B in 2004) due to imports which jumped 4.8% (NSA, 23.9% y/y) though exports surged as well by 22.2% (NSA, 32.7% y/y). The US trade deficit with Japan deepened sharply m/m to $7.4B ($75.6B in 2004) due to a 12.6% (NSA, 6.9% y/y) surge in imports and the monthly trade deficit with the Asian NICs deepened to $1.6B ($21.9B in 2004). The deficit with the European Union deepened sharply to $12.1B ($109.3B in 2004) due to a 13.0% (14.5% y/y) jump in imports.

Foreign Trade Oct Sept Y/Y 2004 2003 2002
Trade Deficit $68.9B $66.0B $55.6B (10/04) $617.6B $494.8B $421.2B
  Exports - Goods & Services 1.7% -2.4% 9.2% 12.6% 4.6% -3.0%
  Imports - Goods & Services 2.7% 2.7% 14.5% 16.6% 8.5% 2.1%
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