Exports Hit Record High Heading Into the Fourth Quarter
The U.S. trade deficit narrowed in October, according to data released by the Bureau of Economic Analysis on Wednesday. The trade gap shrank from -$43 billion in September (revised from -$41.8 billion) to -$40.6 billion in October.
Total October exports increased 1.8 percent on the month to a record $192.7 billion, and total imports increased nearly half a percent to $233.3 billion, yielding a deficit that was slightly wider than the $40.2 billion estimated by economists. For the three months ended in October, the United States ran an average trade deficit of $40.9 billion ($190.5 billion average exports and $231.4 billion average imports), slightly wider than the average deficit of $40.2 billion ($189.5 billion average exports and $229.8 billion average imports) for the three months ended September.
At a glance, the data is good news for fourth-quarter gross domestic product. October exports were the highest on record, and continued foreign demand for U.S. goods and services — particularly industrial supplies and, increasingly, energy goods — could support manufacturing.
The trade report can be used as an indicator of both the health of the U.S. economy and the health of foreign economies. Strong imports typically suggest that the domestic economy is doing well because demand for foreign goods is high, and strong exports suggest the same for foreign economies.
In October, the U.S. decreased its trade deficit with China from $30.5 billion to $28.9 billion but increased its deficit with the European Union from $8 billion to $14.3 billion. The U.S. surplus with Hong Kong shrank from $3.2 billion to $2.8 billion.
The overall increase in U.S. exports was driven by industrial supplies and materials and consumer goods, mostly manufacturing products. This is consistent with high readings of export components of the manufacturing purchasing managers’ indexes maintained by the Institute for Supply Management and Markit Economics.