The U.S. trade deficit saw a significant reduction in October, reflecting shifting trade dynamics amidst global economic challenges. Here’s a detailed overview of the report:

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Trade Deficit Reduction

The trade deficit dropped by 11.9%, settling at $73.8 billion in October, compared to $83.8 billion in September. This reduction reflects changes in both imports and exports.

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Import Trends

Imports declined sharply by 4.0% to $339.6 billion, the steepest fall since November 2022. Key contributors include:

• Capital Goods: Down by $7.5 billion, primarily in computers and semiconductors.
• Industrial Supplies: Decreased by $3.3 billion, marking the lowest level since June 2021, with petroleum imports significantly affected.
• Consumer Goods: Notably, pharmaceutical imports declined.
• Automotive Vehicles: Recorded a drop in import volumes.

Despite the overall decline, service imports reached a record high of $70.2 billion, a $1.4 billion increase driven by travel and intellectual property services.

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Export Performance

Exports fell by 1.6% to $265.7 billion, primarily driven by declines in goods exports (down by 3.0% to $170.7 billion). Major sectors impacted include:

• Capital Goods
• Automotive Vehicles
• Industrial Supplies

However, service exports grew by $1.0 billion, achieving a record high of $95.1 billion, thanks to travel and business services.

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Goods and Services Trade Deficit

• The goods trade deficit narrowed by 9.5% to $98.7 billion, reducing further by 7.3% after adjusting for inflation.
• Service trade maintained growth, with exports outpacing imports in key areas.

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Impact on GDP

Trade continued to weigh on GDP growth, reducing economic output by 0.57 percentage points in Q3 2024. The U.S. economy grew at an annualized rate of 2.8% during this period.

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Key Numbers at a Glance

Category	Value (October 2024)	Change (%)
Trade Deficit	$73.8 billion	-11.9%
Imports (Total)	$339.6 billion	-4.0%
Goods Imports	$269.3 billion	-5.5%
Service Imports	$70.2 billion (record high)	+2.0%
Exports (Total)	$265.7 billion	-1.6%
Goods Exports	$170.7 billion	-3.0%
Service Exports	$95.1 billion (record high)	+1.0%
Goods Trade Deficit	$98.7 billion	-9.5%
GDP Growth Rate (Q3 2024)	2.8% (annualized)	Drag: -0.57 points

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Conclusion

The narrowing trade deficit is a mixed signal for the U.S. economy. While reduced imports point to weaker domestic demand, the growth in service trade highlights resilience in specific sectors like travel and intellectual property. Policymakers and businesses will need to adapt to these evolving trends as trade continues to shape economic performance.

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