Trade Deficit Narrows by 13.2%; Exports Post Strong Growth, Imports Decline

In October, the trade deficit narrowed considerably, falling 13.2% to a monthly pace of $38.7 billion. This was the second signifigant drop in a row. The trade deficit expanded considerably following the Greek debt crisis last spring, as exports were hurt due to currency revaluations and depressed demand in Europe. Net-exports were a significant drag on GDP growth in Q2 and to a lesser extent in Q3. However, exports have now grown solidly the past two months and this bodes well for adding to growth in Q4.

Over the month, exports grew 3.2%, following growth of 0.5% in September. At the same time, imports fell 0.5%, which was the second similarly sized decline in a row. From a year prior, exports were up 15.9%, while imports were up 16.1%.

Mo. % Change	Oct	Sep	Aug	Jul	Jun	May
Trade Deficit (billions)	$38.7	$44.6	$46.9	$42.9	$50.1	$42.2
Mo. % Change	-13.2	-4.9	9.3	-14.4	18.7	3.4
Exports	3.2	0.5	-0.1	2.0	-1.3	2.8
Imports	-0.5	-0.8	2.0	-2.1	3.1	3.0