The U.S. trade deficit unexpectedly narrowed in September to the lowest level in almost two years as exports climbed to a record.
The gap shrank 5.1 percent to $41.5 billion, the smallest since December 2010 and lower than any estimate in a Bloomberg survey of economists, from $43.8 billion in August, Commerce Department figures showed today in Washington. The increase in sales to overseas buyers was broad-based, with everything from soybeans to fuel and civilian aircraft showing gains.
Growing demand from emerging markets in South and Central America may be helping to overcome a slowdown in Europe and China that is hurting companies such as Emerson Electric Co. At the same time, imports also climbed as U.S consumers are beginning to spend more as the job market stabilizes.
“The outlook in emerging markets is stronger than in Europe, and that’s where we would expect to see export growth,” said Jeremy Lawson, senior U.S. economist at BNP Paribas in New York, who projected the gap would close to $42 billion, matching the lowest among economists surveyed. “Consumer goods imports were strong. Some of that may be in preparation for holiday shopping. The picture is getting better there.”
The median forecast in a Bloomberg survey of 75 economists called for the deficit to expand to $45 billion. Estimates ranged from a gap of $42 billion to $47.6 billion. The Commerce Department revised the August deficit from an initially reported $44.2 billion.
Jobless Claims
Fewer Americans than forecast filed claims for unemployment insurance last week as the effects of Hurricane Sandy started to show up, a report from the Labor Department also showed today. Applications for jobless benefits fell by 8,000 to 355,000 in the week ended Nov. 3.
One state said the loss of electricity due to the storm suppressed filings, while others said workers who lost their jobs as a result of the weather were starting to apply, a Labor Department spokesman said as the data were released to the press.
Stock-index futures held earlier gains after the reports. The contract on the Standard & Poor’s 500 Index maturing in December rose 0.3 percent to 1,392.7 at 9:05 a.m. in New York.
Exports climbed 3.1 percent in September, the biggest gain since July 2011, to $187 billion. Sales of foods and feeds increased by $1.14 billion, and demand for industrial supplies such as petroleum products and fuel oil rose by $3.45 billion.
Purchases from customers in South and Central America climbed to a record, pushing the U.S. surplus with the region up to $2.2 billion from $400 million in August.
Exports to the European Union were little changed at $21.3 billion in September before adjusting for seasonal variations.
The Eurozone’s economy hasn’t expanded since the third quarter of 2011, and the rate of growth in both Canada and China has slowed this year relative to last.
“The pace of growth is unusually weak for this stage of a recovery cycle, and uncertainty in the U.S., China and Europe is resulting in cautious business investment,” Patrick Fitzgerald, director of investor relations at Emerson Electric, said during a Nov. 6 earnings call. “At present, there is no obvious catalyst for economic growth acceleration.”
In the three months-ended September, U.S. sales at the St. Louis-based maker of equipment for power plants and data centers grew 2 percent from a year earlier, and they were little changed in Europe and China, Farr said.
Dollar’s Drop
When those economies begin to turn around, businesses abroad may have an incentive to buy American-made products, which are becoming less expensive as the value of the dollar falls. It was down 3.1 percent on Nov. 2 against a basket of currencies from America’s biggest trading partners after reaching an almost-two-year peak in late July, according to Federal Reserve data. The data also show the dollar has dropped 28.5 percent over the past decade.
Imports increased 1.5 percent to $228.5 billion from $225.2 billion in the prior month, led by demand for cell phones and fuel products.
Apple Inc.’s iPhone 5 became available on Sept. 21 in the U.S. and more than 5 million units sold in the first three days, surpassing a record set last year by the previous model. Demand for the new handset exceeded the initial supply, the Cupertino, California-based company said.
The trade gap with China, where parts for the iPhone are manufactured, climbed to $29.1 billion in September from $28.7 billion the prior month.
Consumer Spending
Imports are likely to keep growing as consumer demand firms, widening the trade gap. Household spending advanced in September by the most since February.
After eliminating the influence of prices to produce the numbers used to calculate gross domestic product, the trade deficit shrank to $46.8 billion from $48.2 billion in August.
The Commerce Department initially estimated that trade shaved 0.2 percentage point from gross domestic product in the third quarter. The report showed the world’s largest economy grew at a 2 percent annual pace from July through September after expanding at a 1.3 percent rate in the previous three months.
