Highlights
The U.S. trade deficit unexpectedly improved in September but a significant part of it appears to have been related to flight to safety to gold during September's weak financial markets. The September trade gap shrank to $43.1 billion from $44.9 billion in August. The latest shortfall was narrower than analysts' expectations for a $46.3 billion deficit. Exports gained 1.4 percent after edging up 0.1 percent in August. Imports rose 0.3 percent in September, following a 0.2 percent decline the prior month.

The improvement in the trade gap was led by the nonpetroleum goods gap which shrank to $31.5 billion from $33.9 billion in August. Exports of industrial supplies jumped $1.4 billion with $1.6 billion coming from nonmonetary gold. This was likely flight to safety with demand for gold up in the month. The petroleum gap worsened to $26.6 billion from $26.0 billion the prior month. The services surplus slipped to $15.8 billion from $16.0 billion in August.

For the goods component, export gains were widespread. The September increase in exports of goods reflected increases in industrial supplies and materials ($1.4 billion); consumer goods ($0.8 billion); automotive vehicles, parts, and engines ($0.2 billion); and capital goods ($0.1 billion). A decrease occurred in other goods ($0.1 billion). Foods, feeds, and beverages were virtually unchanged.

The September increase in imports of goods reflected increases in industrial supplies and materials ($0.9 billion); automotive vehicles, parts, and engines ($0.5 billion); and foods, feeds, and beverages ($0.2 billion). Decreases occurred in other goods ($0.6 billion); capital goods ($0.4 billion); and consumer goods ($0.2 billion).

On a not seasonally adjusted basis, the September figures in part show surpluses, in billions of dollars, with Hong Kong $4.3 ($2.4 for August), Australia $1.4 ($1.4), and Singapore $1.3 ($1.0). Deficits were recorded in part, in billions of dollars, with China $28.1 ($29.0), OPEC $10.4 ($13.3), European Union $6.4 ($9.0), Japan $5.2 ($6.7), Mexico $5.0 ($5.5), Germany $4.3 ($4.5), and Canada $3.5 ($2.4).

About half of the unexpected improvement in the deficit came from gold exports. Still, exports were moderately strong otherwise and imports were mixed. Given weakness in Europe, the report is encouraging even after discounting gold movement.

Market Consensus before announcement
The U.S. international trade gap in August trade deficit was unchanged at $45.6 billion. Exports nudged back down only 0.1 percent after rebounding a sharp 3.4 percent in July. Imports were flat in both August and July. A surprise within the report was the petroleum gap which worsened to $26.1 billion from $25.7 billion the prior month. The nonpetroleum goods gap shrank slightly to $34.3 billion from $34.5 billion in July. The services surplus slipped to $35.1 billion from $35.3 billion in July.

2011 Release Schedule

Released On: 1/13 2/11 3/10 4/12 5/11 6/9 7/12 8/11 9/8 10/13 11/10 12/9 Release For: Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct