Strongest reversal of US trade deficit in October since 2001
12 Dec 2006
Though the US has not been able to stem the rising imports from China, it has shown a remarkable 8.4-per cent decline of $58.9 billion in October 2006 compared to October 2005, aided by increasing exports, lower oil imports and a weaker dollar. This is the steepest decline in its ballooning trade imbalance since December 2001.
The weak dollar has helped cut down on import costs by making US products and services cheaper to foreign importers while pushing up import costs to Americans.
While imports declined 2.7 per cent and exports gained a modest 0.2 per cent, the oil import cost declined by 11.3 per cent. However, China exported a record $29.3 billion worth of products to the US in October and the deficit with China rose 6.4 per cent during the month to $24.4 billion, putting the annual deficit on track to beat 2005''s previous record of $202 billion.
The trade deficit data is the last of the data that will shape the Federal Reserve''s decision on US interest rates, due later on Tuesday.
