U.S. Trade Deficit Narrows In October Amid Jump In Exports

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Thursday morning, the Commerce Department released its report on U.S. international trade in goods and services in the month of October, showing that the U.S. trade deficit unexpectedly narrowed compared to the previous month amid a notable increase in the value of exports.

The report showed that the trade deficit narrowed to $32.9 billion in October from a revised $35.7 billion in September. Economists had been expecting the deficit to widen to $36.8 billion from the $36.5 billion originally reported for the previous month.

An increase in the value of exports contributed to the narrower trade deficit, outpacing a modest increase in the value of imports.

The Commerce Department said that the value of exports increased by about 2.5 percent to $136.8 billion, while the value of imports edged up by about 0.5 percent to $169.8 billion.

With the increase, the value of exports rose to its highest level since coming in at $141.5 billion in November of 2008. The value of imports also rose to its highest level since December of 2008.

Christoph Balz, a senior economist at Commerzbank, noted that the real goods deficit, which is relevant for calculating real GDP growth, narrowed to $38.0 billion in October from $41.5 billion in September.

"It is lower than the Q3 average of $39.4 billion, implying that net trade could support growth in Q4 if the deficit does not widen again in November and December," Balz said.

He added, "Together with recent data on a stronger than expected turnaround in the inventory cycle this report points to upside risks to our growth forecast for Q4. Currently, we have penciled in an annualized quarterly growth rate of 3-1/4 percent for Q4."

The report also showed that the politically sensitive trade deficit with China widened to $22.7 billion in October from $22.1 billion in September.

In other economic news, the Labor Department released a report showing that first-time claims for unemployment benefits unexpectedly increased in the week ended December 5th, although claims remained well below the key 500,000 level.

The report showed that initial jobless claims rose to 474,000 from the previous week's unrevised figure of 457,000. The modest increase came as a surprise to economists, who had been expecting jobless claims to edge down to 455,000.

Peter Boockvar, equity strategist for Miller Tabak, said, "While initial claims were above expectations, they are below 500k for a 3rd month and confirm the slowdown in firings."

Thursday morning, the Commerce Department released its report on U.S. international trade in goods and services in the month of October, showing that the U.S. trade deficit unexpectedly narrowed compared to the previous month amid a notable increase in the value of exports. The report showed that the trade deficit narrowed to $32.9 billion in October from a revised $35.7 billion in September. (Market News Provided by RTTNews)