The U.S. trade deficit widened more than expected in October as exports declined, likely positioning trade to be a drag on economic growth in the fourth quarter.
The trade deficit increased 5.1 per cent to $64.3-billion, the Commerce Department’s Census Bureau said on Wednesday. Data for September was revised to show the trade gap rising to $61.2-billion instead of $61.5-billion as previously reported.
Economists polled by Reuters had forecast the trade deficit increasing to $64.2-billion in October.
Exports of goods and services fell 1.0 per cent to $258.8-billion. Goods exports decreased 1.8 per cent to $173.5-billion. Consumer goods exports decreased $2.1-billion, led by gem diamonds and pharmaceutical products. Exports of motor vehicles, parts and engines decreased $0.9-billion.
But exports of industrial supplies and materials increased $1.2-billion. At $51.2-billion, capital goods exports were the highest on record. Exports of services rose $0.6-billion to $85.3-billion, lifted by transport, financial and other business services. But travel services exports fell.
Imports of goods and services gained 0.2 per cent to $323.0-billion. Goods imports edged up 0.1 per cent to $263.3-billion, potentially flagging softening domestic demand amid higher interest rates.
Capital goods imports increased $1.8-billion amid rises in computers, drilling and oilfield equipment. Imports of motor vehicles, parts and engines fell $1.0-billion.
Imports of services increased $0.2-billion to $59.8-billion, supported by a rise in travel.
Trade was neutral to the economy’s 5.2 per cent annualized growth rate in the third quarter. Growth estimates for the fourth quarter are mostly below a 2 per cent pace.