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Economy in Brief

U.S. Trade Deficit Shrinks in October from Record
by Tom Moeller  December 7, 2021

• Exports rebound broadly.

• Petroleum imports strengthen again with higher prices.

• Monthly deficit with China diminishes.

The U.S. trade deficit in goods and services fell to $67.1 billion in October after deepening to a record $81.4 during September, revised from $80.93 billion. A deficit of $67.0 billion was expected in the Action Economics Forecast Survey. Exports rose 8.1% in October (22.4% y/y) following a 3.0% September decline while imports rose 0.9% (18.0% y/y) after increasing 0.6% in September.

The trade deficit in goods lessened to $83.9 billion from $98.0 billion in September, revised from $98.2 billion. It compared to a $82.9 billion deficit in the advance report issued last week. Exports of goods rose 11.1% (26.2% y/y) after a 4.7% September decline. Industrial supplies & materials exports rose 12.5% (43.1% y/y) with higher oil prices. Capital goods exports gained 7.3% (16.4% y/y) in October after falling in each of the prior two months. Auto exports surged 14.1% (-0.6% y/y) following a 2.0% drop. Food exports rebounded 17.1% (12.2% y/y) after declining for two months. Nonauto consumer goods exports improved 8.3% (33.9% y/y) in October after a 3.7% increase.

Imports of goods rose 0.8% in October (16.7% y/y), about the same as in September. Auto imports surged 5.7% (-14.8% y/y) following two months of sharp decline. Foods, feeds & beverage imports strengthened 1.9% (19.8% y/y) after three consecutive monthly declines. Nonauto consumer goods imports rose 1.5% (11.4% y/y) after easing 0.1% in September. To the downside, capital goods imports fell 0.7% (+14.8% y/y) in October after rising 4.1% in September. Industrial supplies & materials imports eased 0.9% (+50.3% y/y) in October after strong gains in the prior two months.

Petroleum imports rose 2.4% in October and more than doubled y/y. The  monthly rise occurred as the price of crude oil strengthened 6.7% to an average $68.77 per barrel from $64.43 in September. The price was substantially higher than $36.37 per barrel one year earlier. Nonpetroleum imports edged 0.2% higher (7.0% y/y) after rising 0.7% in September.

The real (adjusted for price changes) trade deficit in goods lessened to $97.6 billion (chained 2012 dollars) in October from $111.1 billion in September. It was the shallowest deficit in three months. Real exports of goods rose 9.5% (7.1% y/y) in October after a 5.0% September decline. Real imports of goods eased 0.1% (+6.9% y/y) after two straight months of roughly 1.0% increase.

The surplus of trade in services edged higher to $16.8 billion in October after rising to $16.5 in September. The surplus remained down from a high of $26.7 billion in January 2018. The value of services exports rose 1.6% (13.9% y/y) as travel exports rose 6.5% (64.2% y/y) after rising 4.5% in September. Service imports improved 1.6% (24.8% y/y) including a 2.1% rise (194.3% y/y) in travel imports.

The trade deficit with China fell to a seasonally adjusted $28.3 billion from $31.5 billion. Exports rose 25.4% (11.4% y/y) while imports eased 0.9% (+8.0% y/y). The trade deficit with Japan lessened to $3.6 billion as exports rose 10.1% (30.8% y/y) and imports declined 6.7% (-4.9% y/y), off for the fourth month in the last five. The deficit with the European Union fell to $16.6 billion, the smallest deficit in six months. Exports rose 6.8% (27.9% y/y) and imports decreased 1.3% (+18.6% y/y).

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 in AS1REPNA.

Comparing Pandemic Unemployment to Past U.S. Recoveries from the Federal Reserve Bank of San Francisco can be found here.

Foreign Trade in Goods & Services (Current $) Oct Sep Aug Oct '20 2020 2019 2018
U.S. Trade Deficit ($ bil.) 67.12 81.44 73.20 63.68 676.69 576.34 580.95
Y/Y%
Exports of Goods & Services (% Chg) 8.1 -3.0 0.4 22.4 -15.6 -0.4 6.2
Imports of Goods & Services (% Chg) 0.9 0.6 1.3 18.0 -9.5 -0.5 7.4
  Petroleum (% Chg) 2.4 4.3 0.9 103.2 -39.7 -14.0 20.8
  Nonpetroleum Goods (% Chg) 0.7 0.6 1.0 12.5 -3.5 -0.5 7.3
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