Plus: U.S. Machine Tool Sales Rise, Industrial M&A Value Increases and Jobless Claims Fall.

U.S. Trade Deficit Narrows in September
The United States trade deficit narrowed to $44 billion in September, a 5.3 percent decrease from the $46.5 billion total reported for August, largely due to stronger services exports fueled by a weaker dollar, according to the U.S. Department of Commerce on Wednesday. September exports rose by $0.5 billion to $154.1 billion, while imports fell by $2 billion to $198.1 billion.

In September, the goods deficit dropped to $56.9 billion, down $2.2 billion from August, while the services surplus increased $0.2 billion to $12.9 billion. Goods exports remained relatively unchanged at $107.6 billion, with some gains in food and beverages, capital goods and consumer goods. Goods imports fell $2.2 billion to $164.4 billion due to decreases in consumer goods automotive vehicles, parts and engines. Services exports grew to $46.5 billion and services imports rose to $33.7 billion.

“[T]he September report bodes well for economic growth through the end of the year. Imports from other nations — which subtract from economic growth because they take away from domestic production — have been a major drag on the economy in recent months,” the Wall Street Journal reports. “This factor alone cut by half the rate of growth in U.S. gross domestic product in the July-through-September period, subtracting two percentage points to leave overall growth at a modest 2.0 percent rate.”

Despite the shrinking gap, more than half of the U.S. trade deficit was due to a trade imbalance with China. Although the trade gap with China fell by $0.2 billion in September, it remained at $27.8 billion, close to the record-high $28 billion reached in August. The issue has elevated concerns over currency controls and other Chinese trade policies that may be hindering the competitiveness of U.S. firms.

“While a weak dollar has helped American exports, concerns have been rising within the Obama administration about China’s trade dominance and its effect on the global economic recovery,” the New York Times explains. “The administration and some lawmakers have been pressing China to allow its currency to appreciate in value, which would make American exports more competitive in the world market. But so far, China has allowed relatively small increases, and officials there say they have to worry first about job creation and stability.”

U.S. Machine Tool Sales Rise in September
The total value of United States manufacturers’ machine tool and related equipment consumption rose to $399.76 million in September, up 66.1 percent from August and 156.8 percent from the total reported for September 2009, according to the latest U.S. Manufacturing Technology Consumption report, released by the American Machine Tool Distributors’ Association and the Association for Manufacturing Technology (AMT).

“September 2010 was a watershed in the recovery from the recession of 2008-9. The 1,992 units sold this month is the highest number since September of 2008 and demonstrates the resilience and staying power of the U.S. manufacturing base,” AMTDA President Peter Borden said in a statement. “More remarkably, this was done while many factories are running below the capacity levels that require capital goods purchases, despite the tight credit, and in spite of questions about government debt and potential tax increases.”

With a year-to-date total of $2.09 billion, 2010 is up 74.1 percent compared with 2009.

Value of Industrial M&As Increases in Q3
The third-quarter value of merger and acquisition (M&A) deals in global industrial manufacturing improved over the second quarter as well as year-over-year, according to PricewaterhouseCoopers (PwC) last week. Three mega-deals were announced (transactions of $1 billion or more), two of which had values greater than $4 billion, fueling the overall third-quarter increase in deal value.

While the number of deals decreased from 33 in Q2 to 29 in Q3, the deal value last quarter grew significantly, rising to $16 billion, compared with $10.8 billion total in the first half of 2010. Moreover, average deal value, which was $600 million in Q3, increased over the $200 million in Q1 and $300 million in Q2. Average deal value in Q3 2010 was also much higher compared to Q3 2009′s $200 million average.

Most of the industrial manufacturing activity during Q3 involved targets classified as industrial machinery and fabricated metal products manufacturers.

“The first three quarters of 2010 ended on a strong note, and we believe a recovery in deal activity will continue as the year draws to a close,” Barry Misthal, U.S. industrial manufacturing leader at PwC, said in an announcement of the quarterly M&A report last week.

Jobless Claims Fall to 4-Month Low
New initial jobless claims fell steeply in the latest week data was reported. According to the U.S. Department of Labor, seasonally adjusted unemployment claims dropped by 24,000 for the week ending Nov. 6, bringing the total to 435,000, down from the previous week’s revised total of 459,000. The four-week moving average fell 10,000 to 446,500.

The latest weekly jobless figure marked the lowest level since early July, when jobless claims decreased to their record-low for the year, while the four-week moving average was the lowest it has been since Sept. 13, 2008, just before the financial crisis accelerated with the closing of Lehman Brothers.

“Claims have previously dropped sharply this year, but have always bounced back,” the Associated Press warns. “Applications have fluctuated around 450,000 for most of this year, after falling last year from about 600,000 when the recession ended in June 2009. Economists say claims need to drop below 425,000 to signal a healthy pace of hiring.”

The Labor Department attributes the latest weekly drop in claims partly to the relatively warm weather this fall, which has led to construction and manufacturing firms temporarily laying off fewer workers than usual due to cold weather.