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US trade deficit narrows on exports

Wednesday, December 04 15:41:02

The U.S. trade deficit narrowed in October as exports hit a record high, pointing to a pick-up in global demand that should help to support domestic growth in the fourth quarter.

The Commerce Department said on Wednesday the trade gap fell 5.4 percent to $40.6 billion. September's shortfall on the trade balance was revised to $43.0 billion from the previously reported $41.8 billion.

Economists polled by Reuters had expected the trade deficit to narrow to $40.0 billion in October.

When adjusted for inflation, the trade gap fell to $48.3 billion from $51.4 billion the prior month. This measure goes into the calculation of gross domestic product and suggested trade will again contribute to growth this quarter.

The three-month moving average of the trade deficit, which irons out month-to-to month volatility, inched up to $40.9 billion in the three months to October from $40.2 billion in the prior period.

An improving global economy is boosting demand for U.S. exports. In October, exports increased 1.8 percent to $192.7 billion. That was the highest on record and snapped three straight months of declines in exports.

Petroleum exports were the highest on record in October. Exports to China hit a record high as did imports from that country. Still, the trade deficit with China narrowed in October.

China has been one of the fastest-growing markets for U.S. goods, though the pace of export growth slowed in recent months.

Exports to Canada and Mexico also reached all-time highs in October. While exports to the 27-nation European Union rose, they were outpaced by imports, resulting in a record trade deficit.

Overall imports rose a modest 0.4 percent to $233.3 billion in October, the highest in 1-1/2 years. With consumer spending slowing significantly in the third quarter and stocks piling up in warehouses, businesses are probably wary of bringing in too many goods from overseas. (Reuters)