The U.S. trade deficit increased in October because exports fell by a larger margin than imports, the government reported Tuesday, indicating slowing global demand that could negatively affect U.S. growth in the fourth quarter. The Commerce Department said the trade deficit widened 4.9 percent to $42.2 billion. Exports plunged 3.6 percent - the biggest monthly drop in almost four years - to $180.5 billion, as sales of commercial aircraft, autos, and farm products all declined. Imports fell 2.1 percent to $222.8 billion, reflecting fewer shipments of mobile telephones, autos, and machinery. A wider trade deficit acts as a drag on U.S. growth, typically meaning the United States is earning less on overseas sales of American-produced goods while spending more on foreign products. Weak exports also could pressure the U.S. manufacturing sector, where activity has cooled in recent months. The politically sensitive trade gap with China increased to a record high in October. U.S. imports from China jumped 6.4 percent to a record $40.3 billion, pushing up the trade deficit to a record $29.5 billion. U.S. exports to the 27-country European Union (EU) rose 1.4 percent in October to $21.7 billion. The EU was the second-biggest U.S. export market last year, and exports in the first 10 months of 2012 were down 0.7 percent compared to the same period in 2011. The United States ran a record $2.6 billion trade surplus in October with the countries of South and Central America. The surplus with Brazil, the biggest economy in the region, was $1.8 billion as U.S. exports to the country reached a record $4.1 billion.
