WASHINGTON – The U.S. trade deficit widened in October, the Commerce Department said Friday, as exports of U.S. goods fell to the lowest level in more than four years, a reflection of the impact of a weak global economy and stronger dollar.
THE NUMBERS: The trade deficit, the difference between exports and imports, widened 3.4 per cent in October to $43.9 billion, compared to a revised $42.5 billion deficit in September. Exports of goods and services fell 1.4 per cent to $184.1 billion while exports of just goods dropped an even bigger 2.4 per cent to $123.8 billion, the lowest level since June 2011.
Imports of goods and services were also down in October, dropping 0.6 per cent to $228 billion. The drop in imports reflected in part falling oil prices, which pushed petroleum imports down to the lowest level in nearly 15 years.
The deficit with Mexico rose 10.2 per cent to $33 billion, the biggest deficit with Mexico in more than three years. The deficit with China fell 9.1 per cent to $33 billion, still the largest imbalance with any country.
THE TAKEAWAY: A rising trade deficit acts as a drag on overall growth. For October, it means that American manufacturers and farmers were able to sell fewer goods in overseas markets.
KEY DRIVERS: U.S. companies have been hurt this year by a rising value of the dollar, which makes American products more expensive on overseas markets and foreign goods cheaper and thus more attractive to American consumers. U.S. producers have also had to confront economic weakness in key overseas markets such as Europe and China.
BIG PICTURE: Through October, the deficit this year is 5.3 per cent higher than the same period a year ago. Economists expect the deficit will continue to worsen next year as American exporters continue to struggle with the dollar’s strength and growth in other nations remains subdued.