US trade deficit narrows sharply

| December 13, 2010 | 0 Comments

The US trade deficit unexpectedly narrowed in October to $38.7 billion - economists had expected a deficit of $43.6 billion.

The unexpected narrowing arose as imports fell by 0.5% on the month, while exports rose sharply by 3.5% on the month.

However the growth in exports cheered analysts. “Renewed export growth is especially welcome given the slow export growth seen throughout 2010, and it has been driven by the weakening of the dollar over the last several months,” according to Christopher Cornell at Moody’s Analytics.

In other news, US consumer confidence rose further in December after an improvement in November.

The Thomson Reuters/University of Michigan consumer sentiment index edged higher to 74.2 in December, up from 71.6 the previous month - the highest rate since June.

The index has averaged 84.5 over the last 10 years.

Meanwhile, the index of consumer expectations for six months from now, which monitors the direction of consumer spending, grew to 74.2 in December, from 71.6 the previous month.

Consumer confidence is closely monitored in the US, as consumer spending accounts for approximately 70% of total economic output.

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