Highlights
The U.S. trade gap shrank more than expected on a drop in imports but also on a modest gain in exports. The overall U.S. trade deficit in September narrowed to $44.0 billion from a revised $46.5 billion the prior month. The September number came in more improved than the consensus forecast for a $45.0 billion deficit. Exports improved, rising 0.3 percent, following no change in August. Imports in September dipped 1.0 percent after rebounding 2.0 percent in August.

For the latest month, the narrowing of the trade gap was mainly in the nonpetroleum goods deficit which declined to $33.9 billion in September from $36.0 billion the month before. The petroleum shortfall shrank slightly to $21.6 billion from $22.0 billion in August.

Nonoil goods imports in September decreased 1.4 percent, following a 2.1 percent boost the previous month.

By end-use categories, the rise in goods exports was led by a $0.443 billion increase in feeds & beverages with capital goods excluding autos up $0.276 billion. But the capital goods boost was largely civilian aircraft, gaining $0.698 billion. Consumer goods posted a modest gain while industrial supplies and automotive declined.
The decrease in goods imports was led by a sizeable $1.863 billion in consumer goods and a $1.375 billion in automotive. In contrast, nonauto capital goods jumped $1.289 billion. Industrial supplies and foods, feeds & beverages rose marginally.

The latest gain in exports is good news for U.S. manufacturers. However, businesses appear to be dialing back on expectations on demand and inventory needs as nonoil imports for consumer goods have declined. But it is a sign of optimism that capital goods are still up-equipment investment appears to still be on an uptrend. Overall, today's trade report and nice drop in initial jobless claims point to continued moderate recovery.

Equity futures rose on the news but more on a sharp drop in initial jobless claims (released a day early due to the Veterans Day holiday).

Market Consensus before announcement
The U.S. international trade gap increased sharply in August to $46.3 billion from $42.3 billion the prior month. Exports edged up a modest 0.2 percent, following a 2.0 percent gain in July. Imports rebounded 2.1 percent, following a 2.1 percent decline in July. Nonoil goods imports in August rebounded 2.2 percent, following a 3.0 percent decrease the month before. The worsening in the trade gap was primarily in the nonpetroleum deficit which grew to $35.9 billion in August from $33.2 billion the previous month. The petroleum goods gap expanded to $21.9 billion from $20.8 billion in July. For September, higher oil prices may boost the trade gap though the consensus is expecting a little shrinkage.

2010 Release Schedule

Released On: 1/12 2/10 3/11 4/13 5/12 6/10 7/13 8/11 9/9 10/14 11/10 12/10 Release For: Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct