Trade gap in US widens to a four-month high

Bloomberg

The US trade deficit widened to a four-month high in October as overseas sales weakened and American companies imported more equipment and consumer goods. The gap grew to $42.6 billion from the prior month’s revised $36.2 billion, Commerce Department figures showed. The 17.8 percent increase from September was the largest since March 2015. The Bloomberg survey median called for a $42 billion shortfall.
Stronger demand for imported merchandise indicates trade will weigh on US growth after net exports in the third quarter contributed the most since the end of 2013. What’s more, the latest rally in the dollar could squelch prospects for a pickup in exports as American-made goods become more expensive overseas.
“On balance, trade is expected to be a drag on GDP growth,” Jay Bryson and Tim Quinlan, economists at Wells Fargo Securities LLC, wrote in a note. “The primary rationale for that is the fact that growth in the United States is still relatively steady and we are forecasting steady growth in consumer spending. The global economy is still on shakier footing.”
Bloomberg survey estimates ranged from shortfalls of $37.5 billion to $44 billion after an initially reported $36.4 billion September deficit. Exports decreased 1.8 percent, the most since January, to $186.4 billion in October on slower sales of foods, consumer goods and industrial supplies, the Commerce Department data showed. At the same time, exports of services were a record.
Imports rose 1.3 percent to $229 billion, reflecting the largest inflow of merchandise since September of last year. The value of telecommunications gear, pharmaceuticals and mobile phones entering the US in October increased. After eliminating the influence of prices, which renders the numbers used to calculate gross domestic product, the trade deficit widened to $60.3 billion, the highest in four months, from $54.2 billion in the prior month.