Washington, Dec. 7 (BNA): The US trade deficit narrowed to $67.1 billion in October, the lowest level in six months, after hitting its highest level in September. A significant rebound in exports helped offset a much smaller increase in imports.
The Commerce Department reported Tuesday that the October deficit was 17.6% below its all-time high in September of $81.4 billion. This is the smallest monthly deficit since the $66.2 billion imbalance in April, the Associated Press said.
Economists see the strong rebound in exports as evidence that global supply chains are beginning to disintegrate, and believe that smaller deficits this quarter could give a boost to overall US economic growth.
There were gains in many export categories, indicating that the recovery of the global economy is starting to boost demand for US products. Americans’ demand for imports was racing ahead of export sales as the US economy recovered more quickly than other countries from the pandemic.
In October, exports rose 8.1% to $223.6 billion while imports rose 0.9% to $290.7 billion. A deficit is the gap between what the United States exports to the rest of the world and the imports it buys from foreign countries.
America’s total trade deficit is $705.2 billion so far this year, up 29.7% from the same period last year. Trade flows were sharply reduced last year as the COVID pandemic restricted economic activity.
Part of the October increase in exports reflected an increase in oil exports, reflecting the return of more normal operations at Gulf Coast refineries that had been closed by Hurricane Ida.
Big gains in US auto exports and imports indicate that the global shortage of computer chips that has hampered car production is beginning to recede, a trend that leaders in the auto industry have noted.
Andrew Hunter, chief US economist at Capital Economics, predicted that the improved business picture would add about one percentage point to US economic growth in the current October-December quarter.
It expects gross domestic product to expand at an annualized rate of 6.5% this quarter, a significant improvement from the modest 2.1% growth rate in the third quarter.
While the trade report provided evidence that supply chain problems are receding, Hunter noted that while the number of ships waiting off US ports has declined in recent weeks, they remain at “historically high levels.”
He also warned that the emergence of a new omicron variant and the reinstated travel restrictions could weaken services trade in the coming months.
Tuesday’s report showed that the goods deficit totaled $83.9 billion in October while the US services trade surplus, which includes payments for airlines and other travel, was $16.8 billion.
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