Our trade deficit rose by 3.3% October, after falling by a revised 12.9% in September, as the net value of both our exports and imports decreased.   The Census report on our international trade in goods and services for October indicated that our seasonally adjusted goods and services trade deficit rose by $1.4 billion to $43.9 billion in October from a September deficit which was revised from $41.8 billion to $42.5 billion.  The value of our October exports fell by $2.7 billion to $184.1 billion on a $3.1 billion decrease to $123.8 billion in our exports of goods which was partially offset by an increase of $0.4 billion to $60.3 billion in our exports of services, while our imports fell $1.3 billion to $228.0 billion on a $1.0 billion decrease to $186.8 billion in our imports of goods and a $0.2 billion decrease to $41.1 billion in our imports of services.  Export prices averaged 0.2% lower in October, so the real growth in exports was greater by that percentage, while import prices were 0.5% lower, similarly incrementally increasing growth in real imports.

The drop in our October exports included significant decreases in our exports of industrial supplies, capital goods, foods and feeds, and consumer goods.  Referencing the Full Release and Tables for October (pdf), in Exhibit 7, we find that our exports of industrial supplies and materials fell by $1,609 million to $33,575 million on a $443 million drop in our exports of fuel oil, a $417 million drop in our exports of other petroleum products, a $183 million drop in our exports of fertilizers, and decreases in excess of $100 million in our exports of non-ferrous metals not otherwise listed, other unlisted chemicals, non-monetary gold and unmanufactured agricultural materials.  Our exports of capital goods fell by $928 million to $44,409 million on a $515 million decrease in our exports of industrial engines, a $457 million decrease in our exports of civilian exports, and a $345 million decrease in our exports of electrical apparatuses which were partially offset by a $565 million increase in our exports of telecommunications equipment.  Our exports of foods, feeds and beverages fell by $589 million to $10,209 million on a $203 million drop in our exports of corn, a $146 million drip in our exports of wheat, and a $145 million drop in our exports of nuts, which were partially offset by a $145 million increase in our exports of soybeans. Our exports of consumer goods fell by $516 million to $16,515 million on decreases of $352 million in our exports of artworks and antiques and $316 million in our exports of jewelry.  In addition, our exports of automotive vehicles, parts and engines fell by $162 million to $12,783 million, while only our exports of goods not categorized by end use rose saw an increase in October, rising by $813 million to $5,947 million.

Exhibit 8 in the Full Release and Tables gives us details on our imports and shows that a $2,040 drop to $36,409 million in our imports of industrial supplies and materials was largely responsible for the October drop in imports, as our imports of crude oil fell by $1,076 million, our imports of fuel oil fell by $319 million, our imports of other petroleum products fell by $427 million, and our imports of fertilizers fell by $171 million.  In addition, our imports of foods, feeds, and beverages fell by $430 million to $10,323 on a $147 million decrease in our imports of meat and smaller decreases in most other food imports.  Meanwhile, our imports of capital goods rose by $538 million to $49,822 on a $358 million increase in our imports of telecommunications equipment and a $352 million increase in our imports of civilian aircraft, our imports of automotive vehicles, parts, and engines rose $287 million to $29,076 million, and our imports of consumer goods rose $245 million to $51,707 on increases of $704 million in our imports of cell phones, $511 million in our imports of artwork and antiques, and $265 million in our imports of gem diamonds, which were partially offset by decreases of $279 million in our imports of footwear and $204 million in our imports of pharmaceutical preparations.  In addition, our imports of goods not categorized by end use rose by $232 to $7,376 million...

To assess the impact of October trade on 4th quarter growth figures, we must first adjust the value of October imports and exports for inflation and then compare those figures to the similarly adjusted 2nd quarter figures.  Exhibit 10 in the pdf for this report gives us monthly goods trade figures by end use category and in total, already adjusted in chained 2009 dollars, the same inflation adjustment used by the BEA to compute trade figures for GDP, albeit they are not annualized here.  From that table, we find that 3rd quarter real exports of goods averaged 120,999 million monthly in 2009 dollars, while inflation adjusted October exports were at 119,660 million in the same 2009 dollar quantity index representation.  Annualizing the change between the two figures, we find that 4th quarter real exports are running at a 4.5% annual rate below those of the 3rd quarter, or at a pace that would subtract about 0.36 percentage points from 4th quarter GDP.  In a similar manner, we find that our 3rd quarter real imports averaged 179,814 million monthly in chained 2009 dollars, while inflation adjusted October imports were at 179,987 million.  That would indicate that so far in the 4th quarter, our real imports have increased at a 0.39% annual rate over those of the 3rd quarter.   Since imports subtract from GDP because they represent the portion of consumption or investment that occurred during the quarter that was not produced domestically, their 0.39% rate of increase would subtract another 0.05 percentage points from quarter GDP.  Hence, if October trade figures are maintained throughout the 4th quarter, our deteriorating balance of trade in goods would subtract about 0.41 percentage points from the growth of 4th quarter GDP.  Note that we have not computed the impact of the change in services here, because most of their price changes aren’t readily available..

In addition to the revision to the September trade data, this report also indicates revisions to trade for each of the months from April to August, which would thus also revise GDP for the 2nd quarter and the 3rd quarter.  Revisions to 2nd quarter data will not be made until the next annual revision, which wont be until next summer, but the revisions to third quarter trade will be incorporated into the 3rd estimate of 3rd quarter GDP, which will be released on the 22nd of this month.  This report indicates that the trade deficit for September was revised from $40,812 million to $42,457 million (see table 1, pdf) and also indicates that the trade deficit for August was revised from $48,017 million to $48,811 million, while the trade deficit for July was revised from $41,807 million to $42,433 million (NB: last month's pdf is here).  That gives us a total increase in the trade deficit of $3,065 million for those months vs previously published figures, or worsening of the trade deficit for the quarter at a $12.3 billion annual rate.  Such a further deterioration of our third quarter trade data would subtract another 0.07 percentage points from previously published GDP figures, even before counting any inflation adjustments, which will boost real imports more than real exports.

(NB: the above was cross posted from Marketwatch 666)