The U.S. trade deficit narrowed in October to its lowest level in 10 months, but imports from China hit a record high, the government reported Friday. The Commerce Department said the trade deficit shrank 1.6 percent to $43.5 billion. Both U.S. imports and exports declined, in a possible sign of weakening demand in the United States and abroad. Exports fell 0.8 percent to $179.2 billion, the first drop after three months of gains. Shipments of industrial supplies, such as natural gas, copper, and chemicals, fell. Exports of autos and agricultural goods also declined. Imports fell 1 percent to $222.6 billion, reflecting a 5 percent decline in oil imports and a $3.6 billion drop in industrial supplies and materials. The average price of imported oil fell for the fifth consecutive month to $98.84, the lowest since March. Despite the overall import decline, imports of capital goods and foods increased to records. Imports from China rose to a record $37.8 billion, and imports from Japan increased to $12.3 billion, the highest since April 2008. U.S. exports to China increased to $9.7 billion, the highest in nearly a year. The U.S. trade deficit with China was unchanged in October at $28.1 billion, but remained on track to surpass the annual record of about $272 billion set in 2010. A smaller U.S. trade deficit is positive for fourth-quarter economic growth, since it suggests more domestic demand is being met by U.S. production, which can lead to more jobs and higher consumer spending, which accounts for 70 percent of economic activity. The trade deficit shrank every month in the July-September quarter, as exports grew. That contributed nearly a half-percentage point to the economy's 2 percent annual growth rate in the quarter.
