US trade gap shrinks for first time since July on export surge

New York

THE US trade deficit narrowed in October for the first time since July, reflecting a sharp increase in exports and suggesting that foreign demand for goods is on the rise.

The gap in trade of goods and services shrank 17 per cent to US$67.1 billion, from a revised US$81.4 billion in September, according to Commerce Department data released on Tuesday (Dec 7). The median estimate in a Bloomberg survey of economists was for a shortfall of US$66.8 billion. The value of goods and services exported rose 8.1 per cent to US$223.6 billion in October, the highest on record.

The increase was led by stronger outbound shipments of industrial supplies such as crude oil. Imports meanwhile, climbed 0.9 per cent to US$290.7 billion - also a record - led by shipments of automotive-vehicle parts and engines. The value of goods exports surged the most since July 2020 to a record US$158.7 billion.

The increase in merchandise exports suggests that overseas economies are slowly recovering and demanding more goods from the US. That could suggest that trade puts less of a drag on US economic growth in the coming months, after it subtracted 1.16 percentage points from gross domestic product in the third quarter.

Even so, lean inventories, snarled supply chains and transportation challenges continue to make it difficult for US producers to meet demand for finished goods and supplies.

The merchandise-trade deficit, which strips out services spending, fell to US$83.9 billion, the smallest since October 2020. The nation's surplus in services trade increased for a second straight month to US$16.8 billion.

Travel imports, a measure of Americans travelling abroad, rose for an eighth month to a pandemic high of US$6.38 billion. Travel exports - or spending by visitors to the US - climbed for a second month, reaching US$5.83 billion after the Biden administration lifted travel restrictions on Nov 8. On an inflation-adjusted basis, the October merchandise-trade deficit narrowed to US$97.6 billion, the smallest this year. BLOOMBERG