The U.S. trade deficit unexpectedly narrowed in September to the lowest level this year as exports surged to a record high.
The shortfall shrank 4 percent to $43.1 billion from a revised $44.9 billion in August that was smaller than initially reported, the Commerce Department said in Washington. Exports climbed 1.4 percent, while imports rose 0.3 percent.
A smaller September U.S. trade bill may mean a bigger contribution to third-quarter growth. The gain in imports may signal retailers such as Gap Inc. are keeping a lid on inventories entering the holiday shopping season with unemployment at 9 percent and stagnant wages.
“Exports have held up okay in recent months, but I’m concerned it won’t last going into next year,” Paul Dales, a senior U.S. economist at Capital Economics Ltd. in Toronto, said before the report.
A $46 billion trade gap was projected for September after an initially reported $45.6 billion in August, according to the median forecast of 76 economists surveyed by Bloomberg News. Estimates ranged from deficits of $42 billion to $49.5 billion.
After eliminating the influence of prices to render the figures used in calculating gross domestic product, the trade deficit averaged $45.8 billion in the third quarter. The number was less than the $47.2 billion deficit average in the second quarter.
Before today’s release, Commerce Department figures last month showed a narrower deficit contributed 0.2 percentage point to the 2.5 percent increase in third-quarter economic growth.
Exports climbed to $180.4 billion in September from $177.9 billion, boosted by overseas shipments of industrial supplies, capital equipment, automobiles and consumer goods.
The gain in imports was led by automobiles, food and industrial supplies such as metals and petroleum products. The U.S. imported less crude oil in September even as the cost declined.
The average price of a barrel of imported oil was $101.02 compared with $102.62 in August, today’s report showed. U.S. companies imported about 280 million barrels in September, the fewest in four months.
Imports of consumer goods, including toys, clothing and cookware, declined in September, a month when retailers start getting ready for the holiday shopping season. As a result, the trade gap with China shrank 3.1 percent to $28.1 billion.
Slower job and income growth may limit household spending on non-essential goods. Payrolls rose by 80,000 in October, the smallest gain in four months.
Shoppers at stores from Best Buy Co. to Gap Inc. and Toys “R” Us Inc. all said they’ll spend less this holiday season than last year, according to a poll conducted last month by Worthington, Ohio-based BIGresearch, whose consulting arm conducted the poll by New York-based Brand Keys released last month. Only half of shoppers plan to buy electronics, a 10 percentage-point decline from last year, according to another survey by Brand Keys.
Trade in vehicles and parts was boosted by the ongoing restoration of Japan auto-supply chains following the tsunami and earthquake earlier in the year. Still, recent flooding in Thailand may crimp imports from Japanese- and U.S.-owned factories in the Southeast Asian country at the end of the year.
In October, Nissan Motor Co. and South Korea’s Hyundai Motor Corp. led gains among Asian carmakers as the number of cars sold in the U.S. increased at the fastest pace since February, according to industry data. Toyota Motor Corp. and Honda Motor Co. delivered fewer vehicles in the U.S. than a year earlier.
Even with the jump in September exports, Fed policy makers, after their Nov. 2 meeting, said in statement that “there are significant downside risks to the economic outlook, including strains in global financial markets.”
The European Central Bank’s new president, Mario Draghi, last week told reporters the euro zone was experiencing “slow growth” that will turn into a “mild” economic slump. He spoke in Frankfurt after presiding over a surprise rate cut.
DuPont Co. and Whirlpool Corp. are among those U.S. companies experiencing a slowdown.
“There are parts of Europe that are in, or near, recession,” Ellen Kullman, Wilmington, Delaware-based DuPont’s chairman and chief executive officer, said on an Oct. 25 conference call. Still, “We remain positive on Asia,” and expect a “soft landing in China.”
Helping support overseas demand for U.S. goods is the drop in the value of the dollar since the middle of last year. The Dollar Index, which IntercontinentalExchange Inc. uses to track the currency against that of six major trade partners including the euro and yen, fell 18 percent from June 7, 2010 to April 29. It has since trimmed that loss as the crisis in Europe deepened.
The deficit with Canada widened to $3.5 billion, while the gap with Mexico narrowed to $5 billion. The shortfall with the European Union shrank to $6.4 billion in September after $9 billion a month earlier. The U.S. had a $1.2 billion surplus with Brazil.