U.S. Trade Deficit Widens

U.S. companies have been hurt this year by a rising value of the dollar, which makes American products more expensive on overseas markets and foreign goods cheaper and thus more attractive to American consumers. U.S. producers have also had to confront economic weakness in key overseas markets such as Europe and China. Exports, which rebounded briefly in September, have declined due to weak demand abroad and a strong dollar that has effectively driven up the price of American products. Exports are down 4.3% this year compared with the first 10 months of 2014. That trend could continue as moves by global central banks to stimulate overseas economies weigh further on the U.S. currency.

U.S. Department of Commerce, announced today that the goods and services deficit was $43.9 billion in October, up $1.4 billion from $42.5 billion in September, revised. October exports were $184.1 billion, $2.7 billion less than September exports. October imports were $228.0 billion, $1.3 billion less than September imports.

The strong dollar combined with low oil prices are causing trade shifts. Imports from the European Union and Mexico were the highest on record, partly reflecting how goods priced in foreign currencies have become cheaper. Meanwhile, imports from Russia and other big petroleum exporting-countries tumbled to multiyear lows, as the average price of a barrel of crude oil hit the lowest level since early 2009.

The October increase in the goods and services deficit reflected an increase in the goods deficit of $2.1 billion to $63.1 billion and an increase in the services surplus of $0.6 billion to $19.2 billion.
Year-to-date, the goods and services deficit increased $22.2 billion, or 5.3 percent, from the same period in 2014. Exports decreased $84.7 billion or 4.3 percent. Imports decreased $62.5 billion or 2.6 percent.

The average goods and services deficit increased $0.5 billion to $45.1 billion for the three months ending in October.
• Average exports of goods and services decreased $1.4 billion to $185.0 billion in October.
• Average imports of goods and services decreased $0.9 billion to $230.1 billion in October.
Year-over-year, the average goods and services deficit increased $2.6 billion from the three months ending in October 2014.
• Average exports of goods and services decreased $11.7 billion from October 2014.
• Average imports of goods and services decreased $9.1 billion from October 2014.

Exports of goods decreased $3.1 billion to $123.8 billion in October.
• Industrial supplies and materials decreased $1.6 billion.
• Fuel oil decreased $0.4 billion.
• Other petroleum products decreased $0.4 billion.
• Capital goods decreased $0.9 billion.
• Industrial engines decreased $0.5 billion.

Exports of services increased $0.4 billion to $60.3 billion in October.
• Transport, which includes freight and port services and passenger fares, increased $0.2 billion.
• Financial services increased $0.2 billion.

Imports of goods decreased $1.0 billion to $186.8 billion in October.
• Industrial supplies and materials decreased $2.0 billion.
• Crude oil decreased $1.1 billion.
• Other petroleum products decreased $0.4 billion.
• Foods, feeds, and beverages decreased $0.4 billion.
• Meat products decreased $0.1 billion.

Imports of services decreased $0.2 billion to $41.1 billion in October.
• Travel (for all purposes including education) decreased $0.2 billion.
• Transport decreased $0.1 billion.

Goods by Selected Countries and Areas:

The October figures show surpluses, in billions of dollars, with South and Central America ($2.8), United Kingdom ($0.6), and OPEC ($0.4). Deficits were recorded, in billions of dollars, with China ($30.2), European Union ($13.3), Mexico ($6.3), Germany ($6.2), Japan ($5.3), Italy ($2.3), South Korea ($2.3), India ($2.0), France ($1.7), Canada ($0.2), Brazil ($0.2), and Saudi Arabia (less than $0.1).

• The surplus with members of OPEC decreased $1.3 billion to $0.4 billion in October. Exports decreased $1.6 billion to $5.1 billion and imports decreased $0.3 billion to $4.7 billion.
• The deficit with Mexico increased $0.9 billion to $6.3 billion in October. Exports increased $0.1 billion to $19.7 billion and imports increased $1.0 billion to $26.0 billion.
• The balance with the United Kingdom shifted from a deficit of $1.2 billion to a surplus of $0.6 billion in October. Exports increased $0.4 billion to $5.2 billion and imports decreased $1.4 billion to $4.5 billion.

Goods and Services by Selected Countries and Areas:

The third quarter figures show surpluses, in billions of dollars, with South and Central America ($16.8), OPEC ($9.6), Brazil ($5.7), United Kingdom ($1.9), and Saudi Arabia ($1.7). Deficits were recorded, in billions of dollars, with China ($85.2), European Union ($29.4), Germany ($19.6), Mexico ($14.0), Japan ($13.5), Italy ($7.9), India ($7.1), South Korea ($4.1), France ($3.8), and Canada ($0.4).

• The deficit with China increased $5.5 billion to $85.2 billion in the third quarter. Exports decreased $0.4 billion to $42.0 billion and imports increased $5.1 billion to $127.2 billion.
• The balance with Canada shifted from a surplus of $1.8 billion to a deficit of $0.4 billion in the third quarter. • Exports decreased $1.1 billion to $84.4 billion and imports increased $1.1 billion to $84.9 billion.
• The surplus with members of OPEC increased $3.0 billion to $9.6 billion in the third quarter. Exports increased $1.6 billion to $28.2 billion and imports decreased $1.3 billion to $18.5 billion.

Economists expect the deficit will continue to worsen next year as American exporters continue to struggle with the dollar’s strength and growth in other nations remains subdued. Soft international demand and the strong dollar will lead net exports to continue to act as a headwind to GDP growth over the next several quarters