US Trade Deficit Drops as Exports Get a Boost
Shrinkage is greater than expected, but deficit is still the third largest on record
WASHINGTON, DC - 11/11/04 - The US trade deficit decreased 3.7% in September as exports went up and imports went down, the US Department of Commerce (DOC) has reported.
The agency estimated the September deficit at $51.6 billion, down from a revised $53.5 billion in August but still the fourth month in a row above $50 billion.
The September deficit comprised a goods deficit of $55.6 billion and a services surplus of $4.0 billion.
"It is pretty encouraging news and says that we will probably get an upward revision to third-quarter GDP (gross domestic product)," said David Resler, chief economist with Nomura Securities International in New York.
"The deficit was $2 billion smaller than consensus expectations. It does point to some noticeable upward revision to GDP, offsetting some negative indicators we have had recently," he told the media.
Exports in September climbed 0.8% to a record $97.5 billion, the third consecutive monthly gain, possibly related in part to the four-month slide in the foreign exchange value of the US dollar.
Especially large increases were reported in exports of soybeans, organic chemicals, computer accessories and semiconductors.
Imports dropped 0.8% in value to $149.0 billion, still the second highest level on record. Especially large decreases were reported in oil products and pharmaceuticals.
Even though crude oil prices were up to $37.62 per barrel, the quantity of shipments went down. Oil imports were expected to have increased since September; the crude oil price reached a record $55.67 per barrel on October 25.
After the department released the September trade numbers the value of the dollar resumed its drop against other major currencies, recently falling to a record low $1.30 to the euro in large part on worries about a trade shortfall that remains on track to set a new record this year.
While the trade gap fell more than expected in September, it was still the third-highest on record.
The politically sensitive trade deficit with China increased in September to $15.5 billion, 2.5 times the next largest bilateral deficit - $6.1 billion with Japan.
The Bush Administration has been pressing China to stop pegging its currency - the yuan - to the US dollar for the better part of the last year.
Other large bilateral deficits were chalked-up in September with Canada, $5.3 billion; Mexico, $3.8 billion; Germany, $3.2 billion, and South Korea, $2.1 billion, the DOC reported.
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