October Sees Wider Trade Deficit

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The U.S. Department of Commerce has released its October monthly reading for international trade, and the deficit in goods rose by 6.5% to −$68.3 billion. Bloomberg had projected a −$64.8 billion reading, and September’s deficit was −$64.1 billion.

Making up the numbers was a 1% drop in exports and a 1.5% gain in imports. In dollar terms, exports of goods for October were $129.1 billion (down $1.3 billion) and imports of goods for October were $197.4 billion (up $2.9 billion). A wider than expected trade deficit, if handily larger, could take away from fourth-quarter expectations for gross domestic product (GDP).

The level of advanced wholesale inventories was down 0.4% to $605.7 billion in October (versus $608.2 billion in September). The advance figure on retail inventories was down 0.1% to $618.0 billion in October (versus $618.5 billion in September).

After comparing the October data with September, imports were higher in consumer goods, vehicles and industrial supplies, and they were lower in capital goods and food, feeds and beverages.

Gains were seen in exports of industrial supplies and other goods, while there were lower exports in capital goods, automotive vehicles and consumer goods. The reading for foods, feed and beverages was also lower in October.

As a reminder, the industrial supplies category includes petroleum and petroleum products.

While this is a wider deficit, investors have seen deficits for three decades now. These reports rarely move the markets, but they can cumulatively ratchet up or down expectations for GDP forecasts if the disparities are large enough. Deficit data will have to be factored in for November before the real impact is known, and the December trade deficit data will not be out until the end of January.