November 3, 2017 – The International Trade Balance looks at the U.S. Economy’s transactions with trading partners around the world for goods, services, income, and financial claims on liabilities. It is the major indicator for foreign trade and has implications for the net exports portion of GDP. A positive trade balance represents more exports than imports while the opposite is true for a negative balance.
The trade deficit in September expanded to $43.5 billion, from August’s revised deficit of $42.8 billion (+0.4 billion revision). The deficit came in slightly below the consensus of $43.4 billion. Exports jumped 1.1% to $196.8 billion while imports came in 1.2% higher at $240.3 billion. For exports, Industrial supplies and services showed gains while capital goods declined. Imports showed gains in capital goods and services and a decline for oil imports.
The widening trade deficit indicates a stronger U.S. dollar. When the dollar is stronger, the U.S. demand for foreign goods will increase due to lower prices for those foreign goods. However, a stronger dollar will formulate exports into higher corporate profits and will rally the stock market. It is likely oil imports decreased due to oil rig workers returning to work and trying to make up for lost time after being shut down for the hurricanes in the southern states.