US trade gap shrinks to $40.6 bn in October

Washington (AFP) - The US foreign trade deficit narrowed to $40.6 billion in October on a strong rise in exports, the Commerce Department reported Wednesday.

The trade gap fell for the first time in four months, by 5.4 percent from September's upwardly revised number of $43.0 billion.

Exports rose 1.8 percent from September to a record $192.7 billion in October.

Imports were up a modest 0.4 percent at $233.3 billion, their highest level since March 2012.

Imports of crude oil, which account for 10 percent of US imports, rose 0.8 percent to $23.9 billion in October.

The October reading was a hair higher than analyst expectations.

"The trade data suggest that external demand for US goods is improving, suggesting a somewhat stronger global economy, and still resilient US domestic demand," said Tu Packard of Moody's Analytics.

A sharp rise in imports from Europe pushed the US trade deficit with the European Union to $14.3 billion from $8.0 billion in September.

The trade shortfall with China shrank to $28.9 billion in October from $30.5 billion the prior month, lowering the odds that it will top the 2012 record gap of $315.1 billion. In the first 10 months of the year, the gap with China was $267.0 billion.

China has the largest two-way trade surplus with the US, drawing criticism that Beijing keeps its yuan currency undervalued to boost exports.

The trade gap also narrowed with Canada and Mexico.

"Sales of goods to China, Mexico, and Canada all set records this past month as global demand for food, energy, industrial supplies, and consumer goods shows strength," said Jay Morelock of FTN Financial.

Year-over-year, the US trade deficit fell 4.9 percent in October.