The good news is that the trade deficit in goods narrowed sharply in
September to a much lower-than-expected $70.4 billion, but the bad news
is both exports and imports, in an indication of economic slowing, fell
sharply. Exports dropped 1.6 percent in the month for year-on-year
contraction of 3.0 percent, showing an oversized 12.6 percent monthly
decline in foods, feeds & beverages that will raise talk of issues
with China. Exports of autos were also down sharply, down 7.2 on the
month in what may be tied in part to the GM strike which began mid-month
September. Imports fell 2.3 percent on the month with this year-on-year
decline at a steep 4.6 percent, with consumer goods falling 5.0 percent
in the month and with capital goods down 2.3 percent and vehicles down
3.5 percent.
Imports are a negative for the GDP calculation and
today's results, where the decline in imports outstrips the decline in
exports, will give a lift to third-quarter GDP estimates (data to be
posted this Wednesday). But more fundamentally the results speak of
slowing US demand and will not be giving a lift to overall assessments
of economic growth, whether domestic or international. Note that
bilateral country data aren't broken out in the advance goods release
but will be posted in next week's trade report that will include
services.
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