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Economy in Brief

U.S. Trade Deficit Falls As Exports Jump
by Tom Moeller December 10, 2009

A lower value of the dollar improves the competiveness of U.S. exports. That undoubtedly was behind at least some of the decline in October's trade deficit to $32.9B following a September deficit of $35.7, which was revised lower from the initial estimate. Exports rose sharply, their sixth month of increase despite economic weakness abroad, while imports fell with a modest decline in oil prices. The latest figure was quite a bit lower than Consensus expectations for a deficit of $37.0B.

Reflecting the competitive value of the dollar, nominal exports rose 2.6% m/m and by 12.4% from the April low. Adjusted for price inflation, however, the gain is more impressive. Real merchandise exports during October rose 4.1% (-6.0% y/y), the third such increase in four months. A  higher chained-dollar value of non-auto consumer goods exports led the increase with a 7.9% (3.5% y/y) surge after the 3.7% September jump. Real capital goods exports were not far behind and posted a 3.6% gain (-10.7% y/y) after a 5.2% September rise. Auto exports also were strong for the fifth straight month (-20.6% y/y). Exports of services rose for the fifth straight month (-5.6% y/y).

Overall imports rose just 0.4%, the gain held back by lower oil prices. Petroleum imports fell 9.7% m/m (-39.7% y/y) as the average daily quantity imported fell 12.5% (-19.2% y/y). The dip in the per barrel cost of crude petroleum to $67.39 helped the overall figure to decline. Working the other way, U.S. economic recovery was apparent in real nonoil imports which rose 2.2% during October for the third increase in four months. These gains lessened the y/y decline to 11.9% from its worst of 24.6%. Real non-auto capital goods imports jumped 3.5% (-13.0% y/y) after a 2.8% September rise. Real nonauto consumer goods imports rose 2.6% and by 7.8% since June. These gains are turnarounds from earlier sharp declines. Real automotive vehicles & parts imports also jumped 1.9% (-7.4% y/y) in October, the fifth consecutive month of gain. Finally, services imports rose a modest 0.2% (-7.3% y/y) as U.S. travels abroad were discouraged by the lower dollar. Travel imports fell 7.2% y/y and passenger fares fell 27.0%)

By country, the trade deficit with China fell to $22.7B from $27.9B last October as exports rose 12.7% y/y and imports fell 13.3%. With Japan, the trade deficit also narrowed sharply to $4.4B from 6.1B one year earlier as the 21.0% decline in imports outpaced the 13.0% decline in exports. With the European Union, the trade deficit more than halved to $4.9B as imports fell 20.5% y/y which was twice the decline in exports.

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

Foreign Trade  October September August Y/Y 2008 2007 2006
U.S. Trade Deficit $32.9 $35.7B $30.3B $59.4B (10/08) $695.9 $701.4 $760.4
 Exports - Goods & Services 2.6% 2.8% 0.3% -8.6% 11.2% 13.2% 13.3%
 Imports - Goods & Services 0.4% 5.6% -0.5% -18.8% 7.6 6.0% 10.8%
  Petroleum -10.4% 20.7% -5.4% -41.0% 37.0% 9.4% 20.1%
  Nonpetroleum Goods 2.9% 4.2% 0.3% -15.2% 1.5% 4.8% 9.1%

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