US trade deficit rises in October but November sees more price declines

The US trade numbers for October are out. Reuters reports:

The U.S. trade deficit widened unexpectedly in October to a record $68.9 billion, government data showed on Wednesday, setting the stage for a sharp slowdown in economic growth in the fourth quarter.

Economists had expected the trade gap to shrink in October to $63.0 billion, but deficits with China, Canada, the European Union, Mexico and OPEC all ballooned to fresh highs, while petroleum imports hit a record despite falling prices...

The Commerce Department said imports of goods and services rose 2.7 percent to a record $176.4 billion as petroleum imports rushed to fill the gap left by hurricane-depleted domestic production.

While oil import prices declined in the month to an average $56.29 per barrel, the volume of crude imports surged 9.3 percent, driving the value of imports to their second-highest level on record.

Exports increased a smaller 1.7 percent to $107.5 billion, the second-highest on record, as an end to a strike at Boeing pushed aircraft exports up 173 percent in the month.

The trade data adds to downward pressure on the US dollar. Bloomberg reports:

The dollar fell by the most in almost five months against the yen after Japanese business confidence rose to the highest in a year and the U.S. trade deficit unexpectedly widened to a record....

Against the yen, the dollar slid 2.2 percent to 117.32 by 3 p.m. in New York from 119.95 yen yesterday, according to foreign- exchange system EBS. The dollar's decline is the biggest since July 21, when it fell 2.3 percent... The dollar weakened to $1.2006 per euro, from $1.1945.

The dollar's decline began on concern the Federal Reserve may soon be ending its interest-rate increases...

The Reuters report also covered November import prices.

More up-to-date information on the economy showed U.S. import prices eased last month, which could help ease the trade deficit in November. The Labor Department said import prices fell an unexpectedly large 1.7 percent last month on the back of the biggest decline in the cost of petroleum imports in almost a year.

The report also showed a surprise 0.9 percent drop in prices received by U.S. exporters, the largest decline since December 1991.

This seems consistent with recent price trends in Europe, as mentioned in yesterday's post plus the November CPI data from Germany (via A Few Euros More):

As reported by the Federal Statistical Office, the consumer price index for Germany rose by 2.3% in November 2005 on November 2004. Compared with October 2005, the index was down 0.5%. In October 2005, the year-on-year rate of price change was also +2.3%.