With the value of exports falling at a faster rate than the value of imports in the month of October, the Commerce Department released a report on Tuesday showing that the U.S. trade deficit for the month widened compared to the previous month.
The Commerce Department said the U.S. trade deficit widened to $42.2 billion in October from a revised $40.3 billion in September.
Despite the increase by the size of the deficit, it still came in narrower than the $42.8 billion deficit forecast by economists.
The report also showed that the trade deficit for September was narrower than the $41.5 billion deficit previously reported for the month.
The wider deficit compared to the previous month came as the value of exports fell by 3.6 percent to $180.5 billion in October from $187.3 billion in September.
After reaching a record high in the previous month, the value of exports fell to its lowest level since coming in at $180.3 billion in February.
The drop in exports outpaced a decrease in the value of imports, which fell 2.1 percent to $222.8 billion in October from $227.6 billion in September.
The wider U.S. trade deficit also came as the trade deficit with China widened to a record $29.5 billion in October from $29.1 billion in the previous month.
Hurricane Sandy may also have contributed to the wider trade deficit in October, as the Port of New York and New Jersey was forced to close for the last few days of the month.
Paul Dales, Senior U.S. Economist at Capital Economics, said, "Looking ahead, there was probably some 'Sandy bounce' in trade flows in November."
"But the bigger issue is that the weak global economy has been taking its toll on exports for some time," he added. "And the forward-looking measures of export orders point to further falls. The bottom line is that the external sector will remain a small drag on U.S. GDP growth next year."
Wednesday morning, the Labor Department is due to release a related report on import and export prices in the month of November.
Economists expect import prices to decrease by about 0.4 percent, while export prices are expected to increase by about 0.3 percent.
by RTT Staff Writer
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