Trade deficit dips as exports climb
U.S. crude prices, oil imports reach lowest levels since ’09
WASHINGTON — The U.S. trade deficit fell slightly in October as exports rebounded while oil imports dipped to the lowest level in five years.
The deficit edged down 0.4 percent to $43.4 billion, a drop from a revised $43.6 billion in September, the Commerce Department reported Friday.
Exports climbed 1.2 percent to $197.5 billion, recovering after a September dip. Imports were up as well, rising 0.9 percent to $241 billion, but that increase was tempered by a 0.6 percent fall in imports of petroleum, which dropped to the lowest level since November 2009.
The price of domestic crude oil for January delivery fell 97 cents Friday to $65.84 per barrel on the New York Mercantile Exchange. It was the lowest settlement since July 29, 2009.
Through October, the trade deficit is running 4.8 percent below the same period in 2013.
Paul Dales, senior economist at Capital Economics, said that trade, which added to overall growth in the JulySeptember period, may be a slight negative in the current quarter as imports end up growing faster than exports.
He said that the October performance suggests that exports will grow at an 8 percent rate in the fourth quarter while imports will grow at a slightly faster 10 percent rate. Dales said this could result in overall economic growth coming in close to 2.5 percent in the fourth quarter, down
from third quarter growth of 3.9 percent.
The lower trade deficit so far this year reflects the gains made in U.S. export sales, which have climbed to record levels, a good development for U.S. manufacturers. But there is a concern that economic weakness in Europe and other key export markets could hold back future gains in exports. The U.S. dollar has also been rising in value against other major currencies and this could jeopardize export sales as well by making American products more expensive in overseas markets.
“We’re going to see [the trade deficit] widen in the quarters ahead, reflecting the impact of a stronger dollar and weak growth in the rest of the world,” said Scott Brown, chief economist at Raymond James & Associates in St. Petersburg, Fla. “The U.S. looks really good at this point — a lot better than other places.”
The big drop in global oil prices in recent months helps to lower America’s foreign oil bill but it also depresses export sales since a U.S. energy production boom has been pushing U.S. petroleum exports to record levels.
For October, petroleum imports dropped to $26.2 billion while exports of petroleum were down 11.1 percent to $11 billion, a fall that reflected lower prices.
For the year, U.S. energy exports are up 12.1 percent compared to last year, putting them on track to hit a record, even with the recent fall in prices.
The politically sensitive deficit with China narrowed by 8.5 percent to $32.6 billion in October, down from a monthly record of $35.6 billion in September. The release of the new Apple iPhone likely fueled much of the surge in imports during the month.
The deficit with China is on track to set another record for the full year, creating more pressure for Congress and the Obama administration to curb what critics contend are unfair tactics such as currency manipulation that they contend China is employing to gain trade advantages over U.S. companies.
The widening trade gap with China is coming at a time when the Obama administration hopes to finally get Congress to approve the fast-track authority it needs to wrap up a major 12-nation trade agreement with countries known as the TransPacific Partnership.
The administration sees the trade deal as one of the areas where President Barack Obama may be able to find common ground with Republicans.