WASHINGTON (AP) -- The Commerce Department reports on the U.S. trade deficit for October. The report is scheduled to be released at 8:30 a.m. EST Wednesday.
SLIGHTLY LOWER: Economists forecast a deficit of $40.1 billion, according to a survey by FactSet. That would be down from $41.8 billion in September.
PREVIOUS INCREASE: The trade gap widened in September as imports rose to their highest level in 10 months while exports slipped.
TRADE SUPPORT: A smaller trade deficit can boost economic growth because it shows American companies are earning more from sales overseas while U.S. consumers are buying fewer products from their foreign competitors.
The overall economy grew at an annual rate of 2.8 percent in the July-September quarter. That figure will be revised on Thursday and many analysts believe growth will be boosted to a 3.1 percent rate.
However, much of the third-quarter strength came from a buildup in business stockpiles. Businesses are expected to have slowed inventory building in the final three months of the year. For that reason, many economists believe overall economic growth has decelerated to a 2 percent annual rate or less.
Through the first nine months of the year, the deficit is running about 12 percent below last year's pace. The deficit is smaller because exports have risen while imports have declined. Much of the drop in imports reflects a decline in imported oil. The U.S. is being helped on the energy front by rising U.S. production, which is lessening America's dependence on foreign oil.
Trade is expected to add to U.S. economic growth in the final three months of the year, reflecting modest recoveries in Europe, Japan and China. Stronger global growth has helped drive more activity at U.S. factories.
A closely watched survey of U.S. manufacturing activity rose in November to the highest level in 2 ½ years. And the Institute for Supply Management's survey showed growth in exports increased at the fastest pace in nearly two years.
America's deficit with China through September is up 2.6 percent from the same period a year ago, putting it on track to record another all-time high. The U.S. trade imbalance with China is the largest for any country.
In an October report, the Obama administration said that it still believed China's currency, the renminbi, was significantly undervalued but it declined to label China a currency manipulator. Such a designation would have triggered negotiations that could ultimately lead to U.S. trade sanctions against China.
American manufacturers have long contended that China is keeping its currency artificially low to make Chinese goods cheaper in the U.S. market and American products more expensive in China.
- Budget, Tax & Economy
- Politics & Government