United States trade deficit narrows in October

Andrew Cummings
December 8, 2019

In the first 10 months of 2019 the trade deficit has grown only 1.3 percent over the same period in 2018, marking a slowdown after years of steady increases. "We are having very good discussions with China".

The report showed exports and imports both dropped and gave a hint of the impact of trade on fourth-quarter gross domestic product.

Motor vehicle and part imports dropped $1.8 billion.

You didn't see it on the front page of one of the establishment newspapers or in the lead segment on establishment TV, but Reuters reported the number of Americans filing applications for unemployment benefits unexpectedly fell last week, hitting their lowest level in seven months, indicating the labor market remains solid. The impact of a strike at USA auto manufacturer General Motors Co was evident in the trade data, with both exports and imports of motor vehicles and parts falling.

The overall trade deficit tumbled 7.6 per cent to US$47.2 billion (S$64.3 billion) in October - below what economists had been expecting and the lowest level since May past year - from US$51.1 billion in September, the report showed.

Inflation-adjusted petroleum exports rose to a record US$23.9 billion, narrowing the real trade gap for petroleum to US$4.1 billion.

The Commerce Department said this morning that the gap between what America sells and what it buys overseas dropped 7.6 percent to $47.2 billion in October.

A 15 tariff on another $165 billion of imports is scheduled to kick-in on December 15. Exports dipped 0.2 percent to $207.1 billion on a drop in sales of soybeans and aircraft engines.

Many mainstream economists claim the trade deficit reflects an economic reality that doesn't yield much to changes in government policy: Americans consume more than they produce, and imports fill the gap. The U.S. economy is capable of producing far more than the U.S. consumes. Canada posted a trade deficit of C$1.08 billion ($0.82 billion) in October, less than the C$1.37 billion deficit that analysts had forecast.

As negotiations between the world's two-largest economies continue, the Chinese have resumed making large-scale agricultural purchases, particularly of American soybeans, after almost halting such purchases previous year as trade tensions emerged.

Reducing the deficit - central goal of President Donald Trump's aggressive trade agenda - reflected to the decline in the worldwide exchange of goods and services as the global economy weakens. It was the second straight monthly drop in the trade bill and the percent drop was the biggest since January.

A strong dollar is another consistent obstacle to more balanced trade. But it ran a $20.8 billion surplus in services, including education and banking.

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