The U.S. trade deficit narrowed sharply in October, as imports cooled from the previous month and oil prices fell sharply.
October's was the biggest contraction in the deficit in nearly five years.
The Commerce Department said Tuesday that the nation's trade gap was $58.9 billion, down from September's $64.3 billion. October exports were $0.3 billion more than September exports of $123.4 billion, while imports were $5.1 billion less than September imports of $187.6 billion.
Commerce said the goods deficit decreased $5.2 billion from September, to $65.1 billion, and the services surplus increased $0.2 billion, to $6.2 billion. Exports of goods decreased $0.1 billion to $88.5 billion, and imports of goods decreased $5.3 billion to $153.6 billion.
The September to October change in exports of goods reflected decreases in industrial supplies and materials ($0.5 billion) and automotive vehicles, parts, and engines ($0.1 billion). An increase occurred in consumer goods ($0.4 billion). Foods, feeds, and beverages; capital goods; and other goods were virtually unchanged.
The change in imports of goods reflected decreases in industrial supplies and materials ($5.2 billion); capital goods ($0.4 billion); and automotive vehicles, parts, and engines ($0.3 billion). Increases occurred in consumer goods ($0.2 billion); other goods ($0.2 billion); and foods, feeds, and beverages ($0.1 billion).
“While the bulk of October’s $5.2 billion improvement in the overall trade balance came from a smaller petroleum bill, the non-petroleum balance – which is basically manufactured goods – improved by about $1.4 billion,” said Frank Vargo, the National Association of Manufacturer’s vice president of international economic affairs. "October marked the 12th consecutive month in which manufactured goods exports, which were up 15 percent, outpaced imports which are up 11 percent."
He also noted that while the deficit with China continued to increase, the deficit with the European Union is beginning to shrink.
“The year-to-date improvement with the EU is slight so far – only about a $2 billion gain through October - but the rate of improvement appears to be accelerating” Vargo said. “The key factor here appears to be the more favorable U.S.–euro exchange rate.”
Commerce said the October 2005 to October 2006 change in exports of goods reflected increases in industrial supplies and materials ($4.8 billion); capital goods ($4.5 billion); consumer goods ($1.6 billion); other goods ($1.0 billion); foods, feeds, and beverages ($0.8 billion); and automotive vehicles, parts, and engines ($0.2 billion).
The October 2005 to October 2006 change in imports of goods reflected increases in consumer goods ($3.8 billion); capital goods ($3.2 billion); foods, feeds, and beverages ($0.7 billion); and other goods ($0.5 billion). A decrease occurred in industrial supplies and materials ($3.1 billion). Automotive vehicles, parts, and engines were virtually unchanged.