US Trade Deficit Falls Back to Lowest Level Since January

ForexNewsNow | Published on December 13, 2010 at 3:51 am

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US trade balanceIn October, the US trade deficit narrowed sharply, while only a slight decline was expected. The deficit shrank from a revised $44.6 billion to $38.7 billion, while a shortage of $43.8B billion was expected.

The details show that exports rose sharply (by 3.2% M/M), while imports fell slightly (by 0.5% M/M). Excluding transportation, the trade deficit dropped from $22.9B to $19.6B. In the second and third quarter, net-exports posted a big drag on US GDP growth, but this figure, also the real trade deficit was much smaller, is an encouraging sign that net-exports might post a (significant) positive contribution to GDP in the fourth quarter.

In December, University of Michigan consumer confidence improved further, after already a significant increase in November. According to the preliminary estimate, the headline index rose from 71.6 to 74.2, while the consensus was looking for only a slight increase (to 72.5).

The details show that both economic conditions (85.7 from 82.1) and the economic outlook (66.8 from 64.8) improved despite the weak payrolls report.

The improvement in sentiment might be due to the start of the Christmas shopping season, but also QE2 and the Congress moving forward on the tax bill might have brightened sentiment.

Content provided by: KBC Bank



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