US trade gap reaches seven-month high

Bloomberg

The US trade deficit widened more than forecast in September to a seven-month high as imports expanded and the merchandise gap with China hit a record amid an escalating tariff war. The gap for goods and services increased 1.3 percent from the prior month to $54 billion, Commerce Department data showed. The median estimate of economists surveyed by Bloomberg called for a deficit of $53.6 billion. Imports and exports both rose 1.5 percent.
The monthly report provides details around third-quarter data released last week that showed trade imposed the biggest drag on growth in 33 years amid tariffs on China and counter-levies by the Asian nation. While President Donald Trump is threatening more action, US businesses already are facing higher prices and supply-chain disruptions as they rush to buy materials and other items.
Overall exports rose to $212.6 billion, including gains in petroleum products, gold, oil and aircraft. Imports increased to $266.6 billion, boosted by a range of capital and commercial goods. The overall trade gap for goods increased to $76.3 billion, also a record and in line with the preliminary figure last week.
The unadjusted merchandise trade gap with China, the world’s second-biggest economy, widened to $40.2 billion from $38.6 billion. Analysts are monitoring the trade data to assess whether the tariff headwinds are starting to inflict more pain on the economy than they anticipated. The stronger dollar also is a potential hurdle for exports of American-made goods.
An index of US manufacturing fell by more than forecast to a six-month low in October as a measure of export orders declined to the lowest since 2016, data from the Institute for Supply Management showed.
Gross domestic product expanded at a 3.5 percent pace in the July-to-September period, marking the best back-to-back quarters of growth since 2014. Net exports subtracted 1.78 percentage points from GDP growth.