Deficit narrows to $56.5 billion on record declines in imports, exports
WASHINGTON (MarketWatch) -- The U.S. trade gap shrank to $56.5 billion in September as the exchange of goods and services with the rest of the world slowed sharply, offering further evidence of the global economic slump.
Imports dropped $12.5 billion to a seasonally adjusted $211.9 billion, a record 5.6% decline that was accelerated by the largest-ever monthly decrease in crude oil prices.
Exports fell a record $9.9 billion to $155.4 billion seasonally adjusted, a 6% decrease worsened by a sudden drop in aircraft shipments due to the strike at Boeing Co. Read the full government report.
"A global recession means less trade," said Christopher Cornell, an economist with Moody's Economy.com.
The decline in the deficit was in line with expectations of economists surveyed by MarketWatch, who were looking for a trade gap of $56.8 billion. The deficit in August was $59.1 billion. See Economic Calendar.
In a separate report, the Labor Department said initial jobless claims rose to the highest level since September 2001, while continuing claims were at a 25-year high. See full story.
While the decline may have been exaggerated by falling prices, trade in goods also slowed markedly in inflation-adjusted terms, with real imports of goods falling 3.6% to the lowest level in three years. Real exports fell 7.8%, the largest in the 15-year history of those data.
In real (inflation-adjusted) terms, the trade deficit widened 6.7% in September. But over the past year, the real deficit has shrunk by 19.7%, with real imports falling 6% and real exports rising 2.3%.
An improving trade deficit has been a major factor in keeping U.S. gross domestic product growing, even as the domestic economy has bogged down for nearly a year. But with export growth now slowing or even reversing, net trade may no longer provide as much support for GDP unless imports decline even faster.
"Trade can no longer prop up the U.S. economy," wrote Nigel Gault, chief U.S. economist for IHS Global Insight.
Third-quarter GDP will likely be revised lower to a 0.8% annualized decline from a 0.3% decline, said John Ryding and Conrad DeQuadros of RDQ Economics.
The dollar has been strengthening in recent months, which makes foreign-made goods relatively cheaper than those from the U.S. It's probably too early to see much impact from foreign exchange on exports or imports because it usually takes many months for buyers and sellers to adjust.
Oil had a large impact on the September trade figures. But even though the average price of a barrel of imported crude plunged a record $12.41 to $107.58, the quantity of imported crude fell to the lowest level in 51/2 years.
Oil imports averaged 8.4 million barrels a day in September, down 16.5% from the average of 10.1 million barrels in 2007.
Autos are also showing the economy's strains. Auto imports fell 3.8% in September to a four-year low, and are down 4.6% in the first nine months of 2008 compared with 2007.
Imports from China increased 3.9% to a record $33.1 billion on a seasonally unadjusted basis. Despite the record sales in September, Chinese industries are reeling from weaker global demand. Imports from China typically peak in September ahead of the holiday buying season.
Details
Exports of goods decreased $9.8 billion to $108.1 billion, while exports of services fell $71 million to $47.3 billion.
Imports of goods decreased $11.3 billion to $177.7 billion, and imports of services decreased $1.2 billion to $34.2 billion.
Exports of capital goods fell 10% to $38.1 billion, as exports of civilian aircraft plunged 61%.
Exports of industrial supplies fell 11% to $33.3 billion.
Exports of consumer goods fell 4% to $13.5 billion.
Exports of autos and parts fell 13% to $10.3 billion.
Exports of foods and feeds fell 11% to $9.1 billion
Imports of industrial supplies dropped 11% to $65.7 billion, mostly because of falling crude oil imports.
Imports of capital goods increased 1% to $38.8 billion on higher demand for oil-drilling equipment.
Imports of consumer goods fell 8% to $40.1 billion on a 21% drop in drug imports.
Imports of autos and parts fell 4% to $18.5 billion.
Imports of foods and feeds fell 2% to $7.6 billion.
