The US 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 per cent to USD 43.4 billion, a drop from a revised USD 43.6 billion in September, the Commerce Department reported today.
Exports climbed 1.2 per cent to USD 197.5 billion, recovering after a September dip. Imports were up as well, rising 0.9 per cent to USD 241 billion but that increase was tempered by a 0.6 per cent fall in imports of petroleum, which dropped to the lowest level since November 2009. The average price of a barrel of oil dipped to USD 88.47, the lowest point since February 2011.
Through October, the deficit is running 4.8 per cent below the same period in 2013. A lower deficit provides a boost to economic growth.
The lower deficit reflects in part growth in US exports, which have climbed to record levels this year, giving a boost to American manufacturers. But there is a concern that economic weakness in Europe and other key export markets could hold back future gains in exports. The US 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.
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 US energy production boom has been pushing US petroleum exports to record levels.
For October, petroleum imports dropped to USD 26.2 billion while exports of petroleum were down 11.1 percent to USD 11 billion, a fall that reflected lower prices.
For the year, US energy exports are up 12.1 per cent 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 per cent to USD 32.6 billion in October, down from a monthly record of USD 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 US 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 Pacific Rim countries known as the Trans-Pacific Partnership.
