The US trade deficit narrowed for the first time in three months as exports jumped and import growth slowed, though overall transactions remained well below pre-pandemic levels.
The gap in goods and services shrank to $63.9 billion in September from $67bn in August, according to US Commerce Department data released on Wednesday. The figure matched the median estimate in a Bloomberg survey of economists.
Total imports increased 0.5 per cent to $240.2bn, while exports advanced 2.6 per cent to $176.4bn. The nation’s surplus in services was little changed, while the merchandise trade deficit narrowed. Combined, the value of US exports and imports increased to $417bn, the highest since March, still down from $469bn at the end of 2019.
The narrowing of the deficit reflects a two-year high in soybean exports, as well as overseas shipments capital goods such as telecommunications equipment, while imports of consumer goods declined. Even with the monthly change, the gap is much wider than at the onset of the pandemic, reflecting elevated imports to meet consumer demand and a plunge in spending by international visitors, which is reflected in lower travel exports.
Countries across Europe have reinstated stay-at-home measures in the last week, which could constrain US exports in the coming months.
The narrowing of the overall deficit can be partly attributed to China, where the merchandise gap shrank to $24.3bn, the smallest since March, as exports rose and imports fell.
With results of Tuesday’s election up in the air, the outlook for trade policy is uncertain. Former Vice President Joe Biden is keen to reset trade relations with allies such as the European Union after Trump’s duties and hard-line stance disrupted supply chains and increased costs for many US businesses. President Donald Trump, on the other hand, has vowed to end US reliance on China in a continuation of his “America First” trade policy.
