The trade deficit in the U.S. shrank more than forecast in October as a weaker dollar and growing economies overseas propelled exports to a two-year high.
The gap narrowed 13% to $38.7 billion U.S., less than the lowest estimate of 78 economists surveyed by Bloomberg News and the smallest since January, Commerce Department figures showed today in Washington. Exports were the strongest since August 2008 as Mexico and China bought record amounts of U.S. products.
3M Co. and General Dynamics Corp. are among companies that will probably benefit from growing demand in markets like China, Brazil and South Korea, which this year are among the top 10 buyers of American-made goods. Imports stagnated in October as U.S. demand for crude oil plunged, an outcome that may prove to be temporary as the world’s largest economy picks up.
Another report showed the cost of goods imported into the U.S. rose in November by the most in a year, led by gains in commodity prices such as fuels, agriculture products and metals. The 1.3% increase in the import-price index exceeded the median forecast in a Bloomberg survey and followed a revised 1% gain in October, Labor Department figures showed.
The trade gap was projected to be little-changed at $43.8 billion U.S. from an initially reported $44 billion U.S. in September, according to the median forecast of economists surveyed. Estimates ranged from deficits of $39.5 billion to $46.6 billion U.S. The Commerce Department revised the September shortfall up to $44.6 billion U.S.
After eliminating the influence of prices, which are the numbers used to calculate gross domestic product, the trade deficit fell to $45.2 billion U.S., the lowest since April, from $50.3 billion U.S. The figure was smaller than the third-quarter average, indicating trade will contribute to growth this quarter.
Exports increased 3.2% to $158.7 billion U.S., boosted by sales of foods, automobiles, engines and industrial supplies like fuel oil and natural gas.
Since reaching a one-year high on June 7, the dollar has fallen 6.6% against a trade-weighted basket of currencies. The drop makes American goods cheaper to buyers abroad and will keep spurring manufacturing, which expanded for a 16th consecutive month in November.
Growing overseas economies are also contributing to demand for U.S. goods. China, set to become the world’s second-largest economy this year, had a 9.6% gain in third-quarter gross domestic product from a year ago. Singapore, in the running to be the world’s fastest-growing economy this year, expanded 10.6% while Brazil, South America’s biggest economy, grew 6.7%.
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