WASHINGTON—The U.S. trade deficit widened in October as exports resumed a steady decline, the latest sign a slumping global economy is draining foreigners’ appetite for American-made goods.
[ by Josh Mitchell and Kate Davidson | December 04, 2015 | Wall Street Journal]
The trade gap expanded 3.4% from the prior month to $43.9 billion, the Commerce Department said Friday. Exports fell 1.4% to a three-year low. Imports declined 0.6%.
Friday’s report also showed the trade gap in September was larger than previously reported.
Economists surveyed by The Wall Street Journal expected a $40.5 billion deficit in October.
Trade figures are imprecise and swing month to month. Over a broader period, the U.S. trade deficit has widened by 5.3% in the first 10 months of 2015 compared with the same period a year earlier-due to several factors tied to a sluggish world economy.
Exports, which rebounded briefly in September, have declined due to weak demand abroad and a strong dollar that has effectively driven up the price of American products. Exports are down 4.3% this year compared with the first 10 months of 2014. That trend could continue as moves by global central banks to stimulate overseas economies weigh further on the U.S. currency.
Imports have also slumped, declining 2.6% over that period. The drop owes partly to sliding oil prices tied to a global glut in supplies.
Friday’s report showed exports fell due to a decline in industrial supplies–a category that includes oil—and capital goods, such as industrial engines.
Imports, meantime, fell because of lower oil and food imports.
The strong dollar combined with low oil prices are causing trade shifts. Imports from the European Union and Mexico were the highest on record, partly reflecting how goods priced in foreign currencies have become cheaper. Meanwhile, imports from Russia and other big petroleum exporting-countries tumbled to multiyear lows, as the average price of a barrel of crude oil hit the lowest level since early 2009.
Exports represent only about 12% of economic output in the U.S., and the economy has continued to expand steadily despite the weak trade picture. The U.S. economy grew at a yearly rate of 2.1% in July through September despite a sharp decline in export growth.
Beyond economic implications, the trade gap has political implications. The deficit has generated opposition to a free-trade pact reached this year by the Obama administration and 11 nations around the Pacific Ocean. The administration is seeking congressional approval of the agreement.
The U.S. deficit with China has grown 7.6% this year compared with last. The gap with Japan is up 0.8%. The gap with the European Union expanded 7.9%.