The US trade deficit fell sharply
The US trade deficit fell sharply in September thanks to increased demand abroad for some domestically produced products. This does not alter the overall gloomy prospects for US manufacturers, writes Wall Street Journal.
According to official statistics, the deficit has fallen by 15% from August to 40.81 bln. Dollars, which is the lowest level since February. US exports grew by 1.6 percent in September, the strongest increase since the beginning of last year. Imports, however, fell by 1.8 percent.Tax Calculator
In recent months, data on the US trade are extremely inconsistent. Results for September are inconsistent with the overall trend of slowdown in trade due to weak economic activity worldwide. For the first nine months of the year trade deficit has increased by about 4% over the same period last year, a decrease was observed for exports and imports.
Many experts expect export growth in September to prove fleeting. The increase is mainly due to orders from abroad for luxury goods such as works of art, antiques and jewelry. However, there is an increase and industrial goods such as engines and equipment.
Other data, however, suggest that factories continue to be hampered by the strong dollar. Appreciation of the dollar due to expectations the Federal Reserve to start raising interest rates, while European and other major central banks loosened monetary policies, which lowers the rates of respective currencies. These movements expensive US-produced goods to foreign markets. Separate statistics show that in October, the manufacturing sector grew at its lowest rate in more than two years.
Analysts expect exports, which was the main engine of growth emerge from the recent recession, fall or stagnate in the coming months. This in turn is likely to adversely affect the overall economic recovery. "The general trend shows that the net result of foreign trade will be negative for growth in the coming quarters," said economist at Barclays Jess Hurwicz. "Given the slowing growth abroad, which shrinks the demand for US exports and steady domestic demand, stimulate imports, do not expect the trade deficit to continue to shrink," he added. Exports responsible for 12% of US GDP.
The decline in imports in September was partly due to lower oil prices. Imports of oil fell to a 11-year low. In general industrial raw materials imports fell to their lowest levels since August 2009. In many other items also decrease, indicating that businesses and consumers remain shielded in costs. Households have reduced purchases of goods such as phones and cars, and businesses reduced investment in capital goods.