U.S. Foreign Trade Deficit Down 26.3% From Record

The U.S. foreign trade deficit narrowed to $11.5 billion last month, down sharply from the record reached in September as car imports fell, the government reported today.

The Commerce Department said the October deficit, the gap between U.S. exports and imports, was 26.3% lower than the all-time high of $15.5 billion in September.

The October improvement came from a 13.4% drop in imports, down from a record $33.3 billion in September to $28.8 billion last month.

The biggest positive change was a 30.4% drop in car imports in October. Analysts said, however, that the September number had been inflated by a car haulers’ strike in July and August, which prevented the normal number of autos from being delivered in those months.

But even with this factor discounted, the analysts said they believed that the October decline in the overall deficit reflects a turning point in the country’s trading woes.

“The worst of the trade deficit is over, and as we get into the new year the lower dollar should begin to bring the trade deficit down,” said David Wyss, an economist with Data Resources Inc., a Lexington, Mass., forecasting firm.

U.S. exports, however, continued to languish in October, falling 2.1% to $17.4 billion, the lowest monthly level since February, 1984.

U.S. manufacturers have been hurt all year by the strength of the dollar, which makes their products more expensive and harder to sell on overseas markets and attracts a flood of cheaper imports to this country.

While the value of the dollar has fallen somewhat in relation to other currencies, analysts have said it will need to drop 20% more before any improvement shows up in the country’s trade picture.