The U.S. Commerce Department released the trade balance for the month of September today, where the trade deficit widened as imports increased; especially oil imports. However, this could suggest a lower contribution from net exports to GDP in the upcoming revision for the third quarter of this year, as the U.S. economy was reported to have expanded by 3.5% in the Advanced GDP estimate.
The U.S. trade deficit widened in September to $36.472 billion compared with the prior revised deficit of $30.849 billion, as exports increased by 2.9% in September to $131.957 billion; while imports increased by 5.8% to 168.429 billion, where the real dollar deficit widened as well to $41.714 billion from the prior reported deficit of $37.861 billion back in August.
Exports were largely affected by a huge increase in civilian aircrafts as it rose 45.7% in September, while goods exports increased by 4.0%, consumer goods exports increased by 3.7% and automotive exports increased by 3.0%. However semiconductors dropped by 1.5%, and telecom equipment dropped by 6.0% in September.
On the other hand, a huge increase in oil imports was reported in September, as oil imports increased by 26.2%; whereas the United States imported a total of 286.217 million barrels in September with a total value of $19.512 billion and an average price of $68.17 a barrel, as this could indeed be due to the recent increase in economic activity, and might signal that production levels might start to increase gradually.
The U.S. economy has been showing signs of increasing activity over the past few months, especially activity in the manufacturing sector, as the worst slump for the manufacturing sector since the early 1980s seems to have come to an end. While activity in the services and housing sector seems to be stabilizing as well, which further supports the ongoing economic recovery.
However, the U.S. economy is still expected to remain weak over the upcoming period, as the recovery will probably take a long time, as rising unemployment, which is now standing at a 26-year high at 10.2% in addition to tightened credit conditions, will continue to weigh down on economic activity and accordingly we shouldn’t expect the U.S. economy to be able to meet its long term growth potentials any time soon.
Meanwhile, global growth will also contribute to the course of the recovery, as so far it seems that global economies have just started to recover from the worst recession since the Great Depression, and it will probably take some time before we start to witness vigorous economic growth over a global scale; yet signals so far are rather optimistic, as seemingly major economies are on the right track to recover from the worst financial crisis since the early 1930s.
The G20 signaled earlier this week that they still believe that governments should continue to support their economies with fiscal stimulus plans, as though conditions started to improve over the past period, but we are not out of the woods yet, and it will probably take some time before global demand starts to noticeably pick up; meaning that global economies will probably continue their recovery process over the course of 2010…
