The US trade deficit increased in October as exports fell amid declining shipments of soybeans and other goods, suggesting that trade would be a drag on growth in the fourth quarter.
The Commerce Department said yesterday that the trade gap widened 17.8% to $42.6bn.
September’s trade deficit was revised slightly down to $36.2bn.
Economists polled by Reuters had forecast the trade gap increasing to $41.8bn in October after a previously reported $36.4bn shortfall.
When adjusted for inflation, the deficit rose to $60.3bn from $54.2bn in September.
Exports contributed 0.87 percentage point to the third quarter’s annualised 3.2% annualised rate of increase in the gross domestic product.
The jump in exports in the last quarter largely reflected a surge in soybean shipments after a poor harvest in Argentina and Brazil.
While the reversal in soybean shipments, which is weighing on exports, suggests that trade is likely to subtract from GDP growth in the fourth quarter, consumer spending and a firming housing market are expected to keep supporting the economy.
Rising gas and oil well drilling in response to increasing oil prices is also expected to boost growth this quarter.
Exports fell 1.8% to $186.4bn in October.
Exports were held down by declining shipments of food, industrial supplies and materials, automobiles and consumer goods.
Exports of soybeans, which helped power the economy in the third quarter, fell in September.
However, exports of capital goods were the highest since December 2015.
Some of the drag on exports reflects the residual effects of the dollar’s surge against the currencies of the United States’ main trading partners between June 2014 and January 2016.
With the dollar resuming its rally in the wake of Donald Trump’s victory in the November 8 presidential election, exports could struggle in
early 2017.
In October, exports to the European Union fell 1.1%, with goods shipped to the United Kingdom tumbling 12.2%. But exports to China surged 32.8% to their highest level since December 2013.
Imports of goods and services increased 1.3% to $229bn in October, the highest level since August 2015.
Imports of petroleum goods were the highest in a year, reflecting an increase in crude oil prices.
Imports from China rose 4.2% to their highest level in a year.
The politically sensitive US-China trade deficit fell 4.2% to $31.1bn in
October.
A truck moves a container in the Port of Miami. The US trade gap widened 17.8% to $42.6bn in October, the Commerce Department said yesterday.
