The gap shrank 4.4 percent to $56.5 billion, the smallest in almost a year, from $59.1 billion in August, the Commerce Department said today in Washington. Excluding petroleum, the deficit widened as overseas sales of American-made goods dropped by the most since 2001.
Demand for foreign oil, automobiles and televisions may keep falling as the global credit crunch causes American consumers and businesses to retrench. A narrowing trade gap is likely to remain one of the few bright spots, even as shrinking economies in Europe and Japan and a rising dollar cause U.S. exports to slump.
Imports dropped by a record 5.6 percent to $211.9 billion. The cost of a barrel of crude oil fell to $107.58, a decline of $12.41 from the prior month that was the biggest ever. The number of barrels bought was the fewest in more than five years.
Excluding petroleum, the deficit widened to $35.6 billion from $33.7 in August.
Commodity prices have slumped even more since then, signaling the overall trade balance will continue to improve.
Purchases of foreign cars and parts dropped to the lowest level since February 2004, and demand for computers, clothing and electronics made abroad also slumped.
Exports dropped 6 percent, the most since September 2001, to $155.4 billion, led by a $3.3 billion slump in sales of commercial aircraft.
A drop-off in airplane deliveries by Boeing Co., reflecting the effects of an 8-week strike that was resolved Nov. 1, contributed to the second consecutive decline in American exports. The world's second-largest maker of commercial aircraft delivered 6 planes to overseas buyers in September compared with 23 a monthly earlier.
Sales of fuel oil, drilling equipment, computers and food to foreign buyers also decreased, reflecting the slump in economies overseas.
A rebound in the value of the dollar, by making American-made products more expensive to overseas buyers, is contributing to the dimming outlook for exports. The dollar jumped 17 percent from mid July to the end of October, reaching the highest level in two years, according to figures from the Federal Reserve. It hovered near a decade low from March through July.
After eliminating the influence of prices, which are the numbers used to calculate gross domestic product, the trade deficit widened to $42.1 billion from $39.4 billion.
The trade gap with China increased to a record $27.8 billion as imports jumped. China surpassed Canada to become the largest source of imports into the U.S. last year. Since it joined the World Trade Organization in 2001, China has also been the fastest growing major export market for American-made products, according to U.S. government data.
A narrower deficit prevented gross domestic product from contracting even more in the third quarter than the 0.3 percent annual pace reported by the Commerce Department on Oct. 30.
Still, the contribution to GDP for July through September was 1.1 percent, down from 2.9 percent the previous three months. Some U.S. companies are expanding overseas to make up for the slump in domestic demand. Caterpillar Inc., the world's largest maker of bulldozers and excavators, said last month that third- quarter international sales grew seven times as fast as North American revenue, helped by a 33 percent boost in spending on residential construction projects in China.