The U.S. trade deficit in goods and services decreased in September by $4.1 billion to $36.4 billion, a 19-month low, fueled mostly by American firms’ ramped-up exports in services.
The deficit decline was larger than analysts predicted, even as exports have been buoyed in recent months by surges in soybean exports, noted Wells Fargo Global Economist Jay Bryson. A lackluster harvest in South America benefited American soybean producers earlier in the summer, though soybean exports have since declined by some $2 billion in September.
“Looking forward, we expect that net exports will again exert headwinds on overall GDP growth,” Bryson said. “The one-off surge in soybean exports will not be repeated in coming quarters, and growth in many of America’s major trading partners remains lackluster. On the other side of the ledger, continued modest growth in domestic demand likely will cause import growth to accelerate somewhat.”
In September, capital goods exports surged with $1.4 billion in civilian aircraft trade, while consumer goods exports rose by $738 million, according to the Department of Commerce.
Imports meanwhile dropped by $2 billion as petroleum imports were mostly flat in September and imports of capital and consumer goods declined, Commerce said. “The decline in capital goods imports is consistent with the weakness in business fixed-investment spending in recent quarters,” Bryson said. “Given that personal consumption expenditures continue to grow, we view the $837 million decline in consumer goods imports in September as being somewhat of an aberration.”
– Nicholas Stern, editorial associate