The Bureau of Economic Analysis and the Census Bureau said that the U.S. trade deficit widened from $40.3 billion in September to $42.2 billion in October. Note that this brings us back to essentially the level of August, erasing the narrowing of the deficit that occurred in September.
Both goods exports and import levels were lower in October. Goods exports dropped from $133.9 billion to $127.5 billion, and goods imports decreased from $191.3 billion to $186.6 billion. Because exports fell by more than imports, the trade deficit widened. We also saw a minimal decline in service sector exports and imports.
A fair share of the monthly change in exports and imports could be attributed to the petroleum market. The petroleum trade balance widened from $21.6 billion to $24.6 billion for the month, as exports dropped by $661 million and imports rose by $2.4 billion. This was largely the result of higher costs. The average petroleum trade balance for 2012 year-to-date was $25.1 billion. October’s figure still represents an improvement from earlier in the year. January’s petroleum trade balance was $30.0 billion.
Looking specifically at goods exports, they were lower across-the-board hitting all of the major categories. These included industrial supplies and materials (down $2.9 billion), non-automotive capital goods (down $1.9 billion), foods, feeds, and beverages (down $1.4 billion), automotive vehicles and parts (down $370 million), and consumer goods (down $73 million). But, as noted earlier, goods imports were also down. The largest decliner among goods imports was the consumer goods sector, down $3.7 billion.
The good news is manufactured goods exports were up $654 million between September and October using non-seasonally adjusted data. This indicates that manufacturers continue to find opportunities even with so many headwinds globally. Indeed, year-to-date manufactured goods exports are up 4.7 percent over what they were during the same point in 2011. While export growth has slowed, it is still a positive number. Our export gains were with most of our major trading partners, with the obvious exception of the Eurozone which was essentially flat.
Manufacturers in the U.S. continue to find new markets for products despite a challenging economic environment domestically and in many other nations throughout the world. Of course, those headwinds have also had an impact, easing the pace of growth of exports and imports in past few months.
Manufacturers have become more pessimistic of late, as noted in last week’s NAM/IndustryWeek survey. The downturn in their outlook can be explained by the fiscal cliff, but also another key factor has been slowing sales – something that tends to move purchasing managers’ indices and other sentiment surveys. Until Washington begins to create some certainty with pro-growth policies, we will continue to see signs of slowing growth which manufacturers’ ability to create jobs and export.
Chad Moutray is chief economist, National Association of Manufacturers.