The U.S. trade deficit narrowed sharply in September as foreign buyers snapped up a range of American-made goods, but the rebound did little to change a gloomy outlook for factories.
The trade gap shrank 15% from August to $40.81 billion, hitting the lowest level since February, the Commerce Department said Wednesday. Exports climbed 1.6%, the biggest jump since early 2014. Imports fell 1.8%.
Trade figures are notoriously volatile month to month, and September’s report contradicted the underlying trend of a limping global economy that has weighed on trade. Through the first nine months of this year, the U.S. trade gap widened nearly 4% compared with the same period in 2014, with both exports and imports declining.
Many economists expect the jump in exports in September to be short-lived. The increase was due to foreigners stepping up purchases of high-end products such as artwork, antiques and jewelry. Exports of capital goods—big-ticket business items like industrial engines and mechanical equipment—also climbed.
But other data suggest factories continue to be walloped by the strong dollar, linked to economic-stimulus moves by global central banks. Those moves have driven up the price of American goods relative to foreign products priced in other currencies.
Exports, which were a key driver of growth for the U.S. economy coming out of the recession, are expected to stagnate or decline in coming months, weighing on overall economic growth.
“The broader trend in the real goods deficit points to the likelihood that net trade will be a drag on growth in coming quarters,” Barclays economist Jesse Hurwitz said in a note to clients. “With slower growth abroad dampening demand for U.S. exports and solid domestic consumption supporting imports, we do not expect the deficit to continue to narrow in the coming months.”
Economist Stephen Stanley of Amherst Pierpont Securities speculated that the effects of labor strife last winter, which temporarily closed West Coast ports, are still reverberating, obscuring the trade figures. “Ships dumped their goods on a delayed basis in March, hustled back to Asia, returned en masse in June and again in August (apparently, it takes 2-3 months to make that round trip),” he said in a note.
The decline in imports in September was partly due to lower prices for crude oil. Imports of industrial supplies—which includes oil—fell to the lowest level since August 2009. Petroleum imports declined to an 11-year low.
But other imports also fell in a sign that businesses and consumers remain cautious about spending. American households pulled back purchases of foreign goods like cellphones and cars. Firms cut spending on capital items.
Exports represent only about 12% of economic output in the U.S., and the nation’s expansion has remain intact despite turbulence abroad. The trade deficit had a negligible effect on growth in the third quarter, when the economy grew at an annualized pace of 1.5%.
A separate report from the Institute for Supply Management this week showed the U.S. manufacturing sector grew at the slowest pace in more than two years in October. A measure of exports shrank for the fifth straight month.
The trade deficit carries political implications, too, as the Obama administration seeks congressional approval of a trade deal reached last month with 11 nations around the Pacific Ocean. The expanding deficit has stoked public resistance to a further reduction in trade barriers.
The U.S. trade gap with China hit a record in September and has expanded 8.4% this year compared with last. The gap with Japan widened 2.4% this year. The gap with the European Union increased 8.3%.
Corrections & Amplifications:
The rebound in exports occurred in September. An earlier version of this article incorrectly stated the month in the sixth paragraph. Nov. 4, 2015
