International Trade Balance Widened to 9-Month High in October

Record imports lift US trade deficit to $48.7 billion in October, highest since January

Record imports lift US trade deficit to $48.7 billion in October, highest since January

The US trade deficit in goods and services widened by $3.8bn to reach $48.7bn, according to the Department of Commerce. This was the highest level since January.

The trade deficit increase was pushed by rising oil prices, as well as higher imports from China ahead of the holiday shopping season, the Commerce Department said in its monthly report.

A sharp increase in exports of industrial supplies and materials was more than offset by notable declines in exports of soybeans and civilian aircraft.

The mounting trade deficit comes the administration of President Donald Trump enters the latter stages of fraught negotiations with Mexico and Canada to revamp the North American Free Trade Agreement. Economists had expected the deficit to widen to $47.5 billion. The previous month's trade deficit was revised to C$3.36 billion from the earlier estimate of C$3.18 billion. Imports are up 6.5 percent the first 10 months of 2017.

Meanwhile, exports of goods fell by $300m to $130.3bn, while those of services shrank by $300m to $65.6bn.

"The October trade balance report was weaker than we had anticipated, and coupled with the downward revision to September's trade balance, implies a lower contribution from the net exports sub-component to Q4 GDP growth", said Barclays in a research report.

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