Trade Gap Improves, Contraction Continues For Imports And Exports

The trade gap came in as expected, hitting Econoday's consensus at $52.5 billion for September and improved from August's revised $55.0 billion. Showing little change is the contraction underway for both imports and exports, down 1.7 percent to $258.4 billion for the former and down 0.9 percent to $206.0 billion for the latter.

Exports of foods, feeds, and beverages fell $1.5 billion in the month with soybeans down $1.0 billion. Exports of vehicles, in a possible GM strike effect, fell $1.0 billion. Capital goods exports were down $0.8 billion despite a $1.3 billion increase in civilian aircraft and engines.

Imports of consumer goods fell $2.5 billion in the month led by a decline in cell phones while imports of capital goods, in what is a negative indication for domestic business investment, fell $1.1 billion. Vehicle imports fell $1.1 billion.

The goods gap with China was little changed at $31.6 billion from August's $31.8 billion and remains much deeper than monthly deficits of $20 billion earlier in the year. The goods deficit moved lower with Europe, down $1.6 billion to $13.7 billion, and Japan, down $1.1 billion to $5.1 billion.

Turning to services, exports decreased $0.1 billion to $69.2 billion in September with imports up $0.1 billion to $49.9 billion.

Total exports, at minus 0.4 percent, and total imports at minus 0.8 percent are both down year-to-date and are in line with trade reports from other countries, many showing outright contraction underway in a year that has been headlined by trade tensions and rising tariffs.