International Trade: Modestly Smaller Deficit

November 4, 2016
Bottom Line: The trade deficit narrowed moderately in September with exports increasing slightly and imports falling modestly. On a trend basis, the trade deficit is resuming the narrowing trend. Net exports made a moderate positive contribution to the advance 2016 Q3 GDP growth estimate; the Q3 average for real trade balance for goods suggests this will be revised to be just slightly less positive. The International Trade Deficit NARROWED by $4.1 billion to $36.4 billion in September, compared with market expectations for an increase to a $38.0 billion deficit. For the first 9 months of the year, the trade deficit has averaged $40.8 billion, modestly below from the average of $41.8 billion for the same period in 2015. Exports ROSE by 0.6% to $189.2 billion after an increase of 1.0% in the prior month. The declines in food, feed, and beverages and motor vehicles and parts were more than offset by increases in capital goods and consumer goods. Export growth is now 0.9% ABOVE their year ago level. Imports FELL by 1.3% to $225.6 billion after an increase of 1.2% in the prior month. The declines in capital goods and consumer goods were partially offset by increases in motor vehicles and parts and food, feed, and beverages. In September, oil imports decreased. Oil imports 2016 year-to-date levels are now moderately below the 2015 year-to-date levels. Imports are now 1.3% BELOW their year ago level.