Highlights
It is good news all around. The deficit is down as exports are up, oil imports are down, and nonoil imports rebounded moderately. The overall U.S. trade deficit in October shrank to $38.7 billion from a revised $44.6 billion shortfall the month before. The October gap was less negative than analysts' projection for a $44.0 billion deficit. Exports improved, jumping 3.2 percent, following a 0.5 percent rise in September. Imports declined 0.5 percent after slipping 0.7 percent the prior month.

The narrowing of the trade gap was primarily in the petroleum gap which dropped to $19.1 billion from 21.7 billion in September. On the boost in exports, the nonpetroleum shortfall also shrank-to $31.0 billion from $34.1 billion the prior month.

Nonoil goods imports in October rebounded 0.4 percent, following a 1.2 percent decrease the previous month. The comeback suggests businesses are expecting the consumer sector to remain relatively healthy.

By end-use categories, the increase in goods exports was broad based but was led by a $2.6 billion boost in industrial supplies with foods, feeds & beverages up $0.7 billion. Also rising were automotive, up $0.4 billion; capital goods ex autos, up $0.4 billion; and consumer goods, up $0.1 billion. The capital goods number was held back by a $0.4 billion drop in civilian aircraft exports.

The decrease in goods imports was led by a $1.7 billion drop in industrial supplies with the crude oil subcomponent down $2.3 billion. Also declining were capital goods ex autos, down $0.9 billion, and foods, feeds & beverages, down $0.1 billion. Consumer goods imports rebounded $1.3 billion. Automotive imports were flat.

The latest trade report is good news for manufacturers. Demand overseas is holding up nicely. And businesses may be giving the consumer sector an upgrade and vote of confidence with the rebound in imports of consumer goods. Businesses apparently expected these goods to not sit on stockroom shelves.

On the news, markets were little changed as equity futures remained up moderately.

Market Consensus before announcement
The U.S. international trade gap in September narrowed to $44.0 billion from $46.5 billion the prior month. Exports improved, rising 0.3 percent, following no change in August. Imports in September, however, 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.

2010 Release Schedule

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