Strong exports take a bite out of trade deficit

WASHINGTON — The U.S. trade deficit narrowed sharply in October, surprising economists and suggesting that the trade sector may make a positive contribution to growth in the fourth quarter for the first time since the final three months of 2009.

The nation's trade deficit shrank 13.2 percent in October to $38.7 billion from a revised $44.6 billion in September, the Commerce Department said.

This is the smallest trade gap since January. The one-month improvement in the deficit is the biggest since July.

Most of the improvement was due to a sharp increase in exports.

Some of the strength in exports could be tied to a weaker dollar. Relatively stronger growth in emerging market economies compared with the industrial world might be another factor, analysts said.

The narrowing of the deficit in October was a surprise to economists. Analysts surveyed by MarketWatch had expected the deficit to widen slightly to $44.3 billion from the initial September estimate of $44 billion.

At a minimum, the October deficit means that the net impact from trade on growth will be much less negative than the whopping 3.5 percent drag on growth in the second quarter and the 1.8 percent drag in the third quarter.

In October, exports jumped to a new record level while imports decreased slightly.

Exports rose 3.2 percent to $158.7 billion in October. This is the highest level since August 2008, just before the start of the global financial crisis and subsequent recession.

Imports fell 0.5 percent to $197.4 billion in October.

Exports of goods alone rose 4.2 percent to $112.3 billion. The United States exported a record amount of agricultural products in October. Exports of autos, consumer goods and industrial supplies were also strong. Exports of civilian aircraft, often a key driver of export trends, actually declined in the month.

Meanwhile, imports of goods alone slipped 0.7 percent in October to $163.7 billion. Imports of petroleum were the lowest since November 2009.

The value of U.S. crude-oil imports fell to $18.88 billion in October from $20.96 billion in September despite a rise in the price of a barrel of oil to $74.18 from $72.36 in the previous month. The quantity of crude imports fell to 254.5 million barrels from 289.7 million in September.