U.S. Trade Deficit Narrows Sharply in October

• Both exports and imports post declines.
• Lower oil prices help push imports sharply lower.
• Goods trade deficit with China narrows but with Japan it deepens.

The U.S. trade deficit in goods and services (BOP basis) narrowed to $73.8 billion during October after deepening to $83.8 billion in September, revised from $84.4 billion, according to the U.S. Census Bureau. A $75.2 billion deficit had been expected in the Action Economics Forecast Survey. Exports declined 1.6% (+1.9% y/y) during October after a 1.0% September fall. Imports weakened 4.0% (+4.4% y/y) after rising 3.1% in September.

The deficit in goods trade (BOP basis) narrowed to $98.7 billion in October after widening sharply to $109.0 billion in September, which was the largest deficit since March 2022. Goods exports (Customs Value) slide 3.1% (-1.3% y/y) in October after declining 2.0% in September. Exports of foods & beverages declined 4.1% (-0.1% y/y) while industrial supplies & materials dropped 4.2% (-9.2% y/y). Exports of capital goods were off 7.0% (+1.4% y/y). Auto exports plunged 18.6% (-20.6% y/y) while nonauto consumer goods exports fell 6.0% (-3.9% y/y). Other goods exports surged 68.3% (+93.3% y/y) in October.

Imports of goods declined 5.5% during October (+3.3% y/y) after rising 4.0% in September. Imports of foods, fees & beverages declined 3.4% (+8.7% y/y) while industrial supplies & materials imports weakened 5.8% (-4.5% y/y). Capital goods imports declined 8.7% (+8.2% y/y). Auto exports weakened 4.0% (-3.6% y/y) while nonauto consumer goods imports fell 2.8% (8.1% y/y). Imports of other goods declined 5.8% (-1.5% y/y) in October.

Imports of petroleum products fell 8.5% during October (-17.5% y/y) after a 1.9% decline as the cost of crude petroleum fell to $68.38 per barrel (-13.0% y/y) from $71.44 per barrel in September. The value of nonpetroleum imports weakened 5.3% (+5.1% y/y) in October after rising 4.4% in September.

The services trade surplus fell to $24.8 billion in October from $25.2 billion in September which had been the largest surplus since November 2019. Services exports rose 1.1% (8.8% y/y) following a 0.6% September rise. Transport exports rose 1.6% (6.5% y/y) while travel exports gained 1.6% (8.3% y/y). Insurance exports rose 2.0% (15.4% y/y) while charges for the use on intellectual property improved 1.1% (7.9% y/y). Services imports increased 2.1% (9.9% y/y) in October following a 0.4% slip. Transport services rose 1.3% (11.2% y/y) while travel imports rose 5.1% (10.2% y/y). Insurance imports gained 2.4% (20.8% y/y) while charges for the use of intellectual property rose 3.3% (26.8% y/y).

The inflation-adjusted goods trade deficit (customs value) narrowed to $92.4 billion in October after widening sharply to $99.7 billion in September. Real exports declined 4.2% (-1.1% y/y) while real imports rose 5.5% (2.2% y/y).

The U.S. goods trade deficit with China narrowed to a seasonally adjusted $25.5 billion in October after widening to $26.9 billion in September. Exports fell 6.0% (-14.5% y/y) while imports fell 5.4% (-0.8% y/y). The goods trade deficit with the European Union narrowed to $17.1 billion in October from a record $23.8 billion in September. Exports improved 0.2% (2.6% y/y) and imports declined 12.2% (-1.3% y/y). The trade shortfall with Japan increased to $6.5 billion in October after deepening to $5.3 billion in the previous month. Exports fell 5.7% (+0.4% y/y) while imports increased 6.5% (1.8% y/y).

The international trade data, including relevant data on oil prices, can be found in Haver’s USECON database. Detailed figures on international trade are available in the USINT database. The expectations figures are from the Action Economics Forecast Survey in AS1REPNA.