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Economy in Brief

U.S. Trade Deficit Widens in October as Exports Grow Faster than Imports
by Gerald D. Cohen  December 4, 2020

• Trade Deficit increases to $63.1 billion in October.

• Exports grow 2.2%; Imports rise 2.1%.

• Exports remain 13.2% below February level; imports down just 0.6%.

The U.S. trade deficit in goods and services widened to $63.1 billion in October from a downwardly-revised $62.1 billion in September (was $63.9 billion). August was also revised lower to $64.9 billion from $67.0 billion. The Action Economics Forecast Survey anticipated $65.0 billion. Exports gained 2.2% (-13.5% year-over-year), while imports increased 2.1% (-3,3% y/y). With these monthly gains exports remain 13.2% below February levels while imports are down just 0.6% (February 2020 was not the peak in both exports and imports, those occurred in 2018). The trade deficit cut 3.18 percentage points from Q3 GDP growth. Today's data suggest trade was less of a drag in Q3, but will continue to hamper growth in Q4.

The nominal deficit in goods trade increased to $81.4 billion in October from $80.8 billion. The advanced trade data reported last week had a $80.3 billion goods deficit. Exports of goods rose 3.0% (-7.3% y/y) as non-auto consumer goods were up 5.9% (-3.5% y/y). Imports of goods gained 2.3% (2.0% y/y) driven by a 3.2% gain in auto imports (10.2% y/y). Petroleum imports grew 2.9% (-37.2% y/y). Oil prices fell so volumes were up 7.5% in October (-3.1% y/y). Non-petroleum imports rose 2.3% (5.2% y/y). The real (inflation-adjusted) goods trade balance increased to $89.9 billion (chain-weighted 2012$) in October from $87.7 billion in September.

The surplus on trade in services declined to $18.3 billion from an upnwardly revised $18 7 billion (was $16.8 billion). The value of services exports grew 0.5% (-24.3% y/y) led by a 5.7% gain in travel (-74.6%). Imports of services gauned 1.9% (-24.4% y/y) also led by travel (18.9% month-on-month; -81.2% y/y). Services exports are still down 21.8% since February, while imports have fallen by 22.8% (the peaks in services trade occurred in 2019).

The politically-sensitive goods trade deficit with China widened to $26.5 billion in October from $24.3 billion. Exports and imports to China grew 9.3% and 9.1% respectively (68.4% and 13.9% y/y). Despite somewhat stronger growth in export, the deficit with China widened because imports are three times larger than exports. The trade deficit with the European Union narrowed to $15.7 billion while the imbalance with Japan ticked up to -$5.7 billion.

The international trade data, including relevant data on oil prices, can be found in Haver's USECON database. Detailed figures on international trade are available in the USINT database. The expectations figures are from the Action Economics Forecast Survey, which is carried in AS1REPNA.

Foreign Trade in Goods & Services (Current $) Oct Sep Aug Oct Y/Y 2019 2018 2017
U.S. Trade Deficit ($ bil.) 63.12 62.08 64.92 43.03
(10/19)
576.86 579.94 513.79
Exports of Goods & Services (% Chg) 2.2 2.4 2.2 -13.5 -0.4 6.4 6.7
Imports of Goods & Services (% Chg) 2.1 0.6 3.2 -3.3 -0.5 7.5 6.7
  Petroleum (% Chg) 2.9 0.1 14.4 -37.3 -14.0 20.8 27.2
  Nonpetroleum Goods (% Chg) 2.3 0.0 2.8 5.2 -0.4 7.4 5.5
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