The trade deficit narrowed in October to the lowest level of the year, reflecting a drop in imports that will help give the U.S. economy a lift.
The gap shrank 1.6 percent to $43.5 billion, smaller than projected, from $44.2 billion in September, Commerce Department figures showed today in Washington. Purchases from overseas fell to the lowest level since April, due almost entirely to a plunge in demand for petroleum.
Imports of capital goods, like computers and aircraft, and consumer goods climbed, showing spending by American companies and households is keeping the economy growing. Exports to China and South and Central America reached records, indicating demand from developing nations that is benefiting companies like Dow Chemical Co. (DOW) may cushion the U.S. from any slowdown in Europe.
“We are seeing some resilience in U.S. demand,” said John Herrmann, a senior fixed-income strategist at State Street Global Markets LLC in Boston, who projected a gap of $43.6 billion. “Outside of Europe, demand is holding up in the face of this uncertainty. U.S. exports are going to remain in pretty good shape next year.”
Stock-index futures rose after European leaders agreed to boost a rescue fund and tighten budget rules to stem the region’s debt crisis. The contract on the Standard & Poor’s 500 Index maturing in March climbed 0.6 percent to 1,237.1 at 8:49 a.m. in New York. Treasury securities fell, sending the yield on the benchmark 10-year note up to 2 percent from 1.97 percent late yesterday.
Survey Results
The median forecast in a Bloomberg News survey of 80 economists projected the deficit to rise to $43.9 billion from a previously reported $43.1 billion in September. Estimates ranged from deficits of $40.3 billion to $46 billion. The government revised the September gap up to $44.2 billion.
Imports decreased 1 percent to $222.6 billion from $224.8 billion in the prior month. The value of petroleum products, including crude oil, dropped to $26 billion, the lowest level since February, from $28.3 billion.
Excluding petroleum, the trade shortfall widened to $19.1 billion from $17.6 billion in September.
Exports fell 2.2 percent to $179.2 billion, the second- highest on record, reflecting a drop in gold shipments after they surged in September. Overseas sales of capital goods, including drilling equipment and generators, climbed to a record, as did foreign purchases of petroleum products.
