The Bureau of Economic Analysis and the Census Bureau said that the U.S. trade deficit narrowed from $42.64 billion in September to $40.64 billion in October. The drop was mostly attributable to a larger increase in goods exports (up from $132.29 billion to $135.27 billion) than for good imports (up from $194.71 billion to $195.49 billion). The service sector trade surplus increased marginally, up from $19.45 billion to $19.59 billion.
Petroleum was mostly a non-factor in shifting the deficit in October, with the petroleum trade deficit narrowing modestly, up from $19.88 billion to $19.65 billion. Both petroleum exports and imports were higher for the month, but essentially offsetting one another. This suggests that non-petroleum trade accounted for the bulk of the change in the overall trade deficit in October.
Looking specifically at goods exports by sector, the data were mostly positive. There were increased exports for industrial supplies and materials (up $1.5 billion), consumer goods (up $1.0 billion), foods, feeds and beverages (up $618 million), and non-automotive capital goods (up $274 million). The lone decliner was automotive vehicles and parts, down $209 million for the month.
Similarly, on the goods imports side, automotive vehicle and parts imports were also lower, down by $1.0 billion. All of the other major sectors were higher. This included industrial supplies and materials (up $778 million), consumer goods (up $514 million), foods, feeds and beverages (up $278 million), and non-automotive capital goods (up $264 million).
Despite the progress in the monthly trade deficit, we continue to see disappointing growth for manufactured goods exports. Through the first 10 months of 2013, manufactured goods exports were $986.53 billion (using non-seasonally adjusted data). This was up just 1.9 percent from the $968.38 billion observed over the same time period in 2012. As such, it indicates that growth in manufactured goods exports remains soft, decelerating from the 5.7 percent growth rate observed through all of last year. It is is well below the 15 percent rate that would be needed to double exports by 2015, as outlined in the President’s National Export Initiative.
Hopefully, stabilization in the global economy and cautious optimism for better worldwide growth rates in 2014 will produce improved manufactured goods exports moving forward.
Chad Moutray is the chief economist, National Association of Manufacturers.