WASHINGTON – The U.S. trade deficit declined in September to the lowest level in seven months as exports rebounded while imports shrank, reflecting the smallest monthly foreign oil bill in more than a decade.
The trade deficit narrowed to $40.8 billion in September, down 15 per cent from a $48 billion deficit in August, the Commerce Department reported Wednesday.
Exports rose 1.6 per cent to $187.9 billion, helped by stronger sales of commercial airplanes and jet engines.
Imports contracted 1.8 per cent to $228.7 billion. The big drop in oil prices sent petroleum imports down 8.3 per cent to $13.8 billion, the lowest level since May 2004.
Economists are looking for the deficit to widen in the coming months as a weak global economy and strong dollar puts pressure on exports.
The U.S. deficit with China rose 3.8 per cent to an all-time high of $36.3 billion in September as imports from China hit a record. The U.S. deficit with China is running 8.4 per cent higher than a year ago, on track to set another in a string of annual records. The U.S. deficit with China is the largest with any country.
Through September, the U.S. trade deficit is running 3.9 per cent above last year when the deficit for the full year totalled $508.3 billion. Economists are looking for a bigger deficit this year, reflecting a drop in exports, which are down 3.8 per cent so far this year.
U.S. producers are facing export headwinds amid economic weakness in a number of major export markets. U.S. exports have also been hurt by the rising value of the dollar, which makes American goods more expensive on foreign markets.
The U.S. economy slowed to growth of just 1.5 per cent in the July-September quarter, but analysts are looking for a rebound to around 2.5 per cent in the current October-December period.
The Obama administration is preparing to unveil the text of a trade agreement it reached last month with Japan and nine other Pacific Rim nations, the next step in the administration’s effort to win congressional approval for the Trans-Pacific Partnership deal.
However, that approval has been complicated by the announced opposition to the pact by Hillary Rodham Clinton, who is running for the Democratic presidential nomination. Her opposition could make it harder for President Barack Obama to round up the Democratic votes he will need in Congress to get the deal approved.