The unexpectedly large narrowing of the US trade deficit in September to nearly a five-year low was mainly driven by a surge in exports.

The US trade deficit in September narrowed significantly, unexpectedly reaching the smallest scale since mid-2020, mainly driven by a surge in exports. Data released by the US Department of Commerce on Thursday showed that the trade deficit in goods and services narrowed by nearly 11% month-on-month to $52.8 billion, significantly lower than the market expectation of $63.1 billion. The data showed that total US exports in September rose by 3%, reaching the second highest level in history, with the main growth drivers coming from a sharp increase in exports of non-monetary gold and pharmaceutical preparations. In addition, imports only saw a mild growth of 0.6%. The above data has not been adjusted for inflation. Since the US implemented tariff policies this year leading to significant fluctuations in trade, monthly changes in imports and exports have added significant uncertainty to the Gross Domestic Product (GDP) growth. The latest trade data will help economists further adjust their predictions for third-quarter GDP. Prior to the report, the Atlanta Fed's GDPNow model estimated that net exports would contribute 0.86 percentage points to economic growth in the third quarter. After adjusting for inflation, the US merchandise trade deficit in September narrowed to $79 billion, the lowest level in nearly five years; of which, the export of consumer goods, excluding price factors, reached a historical high. Detailed data showed a significant increase in imports of pharmaceutical products in the US in September; meanwhile, imports of capital equipment and automobiles decreased, as did most consumer goods imports, including categories such as mobile phones, household appliances, toys, and furniture. It is worth noting that in September, exports of non-monetary gold reached a record high, almost reversing the surge in imports caused by tariff concerns. A month ago, after the US imposed heavy tariffs on Swiss gold, gold imports surged sharply in the short term and then sharply declined. Overall, the September trade data showed a strong export performance and a moderate import growth pattern, which is expected to provide additional support to the US economic performance in the third quarter, while also highlighting the continued short-term disturbance of tariff policies on the import and export structure.