US Trade Deficit Widens in October After Exports Fall

The U.S. trade deficit widened unexpectedly in October as exports fell to a three-year low, suggesting that trade could again weigh on economic growth in the fourth quarter.

The Commerce Department said on Friday the trade gap rose 3.4 percent to $43.9 billion, a sign that the worst of the drag from a stronger dollar was far from over. September’s trade deficit was revised up to $42.5 billion from the previously reported $40.8 billion. The government revised trade figures going back to April to incorporate more comprehensive and updated quarterly and monthly data.

Economists had forecast the trade gap shrinking to $40.5 billion in October. When adjusted for inflation, the deficit increased to $60.33 billion from $57.37 billion in September.

Trade subtracted 0.22 percentage point from gross domestic product in the third quarter, which expanded at a 2.1 percent annual rate. The dollar’s 18.6 percent appreciation against the currencies of the United States’ main trading partners since June 2014 has eroded export growth.

Exports fell 1.4 percent to $184.1 billion, the lowest level since October 2012. Exports of goods were the lowest since June 2011. Food exports were the lowest since March 2012, while exports of industrial supplies and materials were the weakest in five years. Petroleum exports hit their lowest level since December 2010.

via Reuters

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza