WASHINGTON — The U.S. international trade deficit shrank more than expected in October, falling $5.9 billion to a three-month-low of $38.7 billion as exports of services hit a record and imports fell, the Commerce Department reported Friday.
Economists polled by Thomson Reuters expected a trade gap of $43.8 billion, according to the median estimate.
October exports increased to $158.7 billion from $153.8 billion last month. It was the largest level of exports since August 2008, while exports of services alone, totaling $46.4 billion, was the highest on record. The service export gains were led by business services, travel and freight transportation.
Exports to China reached a record high of $9.3 billion.
U.S. imports fell by $900 million to $197.4 billion. Imports fell in September by $1.5 billion. This was the first back-to-back monthly decline in imports since April and May 2009. Leading the import decline, demand for industrial supplies and materials and capital goods fell. Imports for consumer goods increased.
The September trade deficit was revised higher to $44.6 billion from the $44.0 billion level originally reported last month.
“Data for October may be overstating the improvement in trade,” Diane Swonk, chief economist at Mesirow Financial, said in a research note. “The trade deficit with China actually narrowed, after widening substantially earlier in the year. Preliminary trade data out of China for November, however, suggests that we could see a major reversal of those gains next month.”