U.S. Trade Deficit Narrows Sharply

The U.S. trade deficit narrowed by a record amount in September to $18.7 billion, as huge payments by foreign insurance companies for the terrorist attacks offset a rising in the deficit in manufactured goods.

The Commerce Department said the September deficit was the lowest in 30 months and the 31 percent decline from the August level was the biggest one-month improvement on record. The August deficit was $27.1 billion.

The improvement came all on the services side, however, as the deficit in goods actually rose by 5.4 percent during the month to $35.9 billion.

But this was offset by a big increase in America's surplus in services trade, reflecting an increase of $11 billion in payments related to the Sept. 11 hijacking attacks on the World Trade Center in New York and the Pentagon in Washington.