This week we received some interesting news about international trade that poses some provocative questions as we move into 2014. The U.S. trade balance (released on Wednesday) is normally looked at with a passing glance by markets as the data is two months old. However, this report for October had a surprising number for exports that had everyone paying attention.

To many of us, the trade balance is just expected to be permanently negative, as the U.S. consumption machine imports more than it exports. That was true again in October – to the tune of a $40 billion gap – but both components of the balance rose to significant highs.

Imports rose to $233 billion – the highest level since March 2012. That number is seasonally adjusted to account for the inventory build-up ahead of the holiday season. But what was really interesting was what we saw in exports. Exports rose to nearly $193 billion – the largest number ever posted for U.S. exports. In particular, sales of U.S. goods to China, Canada and Mexico rose to their highest levels ever.

The significance of this lies partly in the timing. October was a rough month for the U.S. economy as we had the standoff in Washington, D.C., on the government shutdown and the debt ceiling debate. Even though much of the macro data from that time frame took a hit because of the government shutdown, the U.S. was selling more products to the rest of the world. Looking at that data in more detail reveals that the export gains were mostly in capital goods – particularly mining and oilfield equipment and industrial machines.

My View: This is unequivocally good news for the U.S. as well as the rest of the world. More purchases of such fixed assets that are critical to the beginning of the manufacturing process portend the potential for a stabilized and growing economy for the rest of the world. If this continues, the global economy could see a better year in 2014.

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