Deficit Widens More Than Advance Trade Report Indicated

The U.S. trade deficit rise to $42.6 billion in October from $36.2 (was $36.4) billion in September left the gap closer to the $44.7 billion 4-month high in June than the 13-month low of $36.9 billion in March. The trade deficit was $0.2 billion larger than indicated by the “advance” trade report, but with boosts for both exports and imports after six months of revisions. The data still show a Q4 unwind of the temporary Q3 lift to food exports from soybeans.

Analysts with Action Economics said the figures are consistent with a 1.8% Q4 gross domestic product (GDP) growth clip after a Q3 GDP growth boost to 3.3% from 3.2% that includes a $1 billion trimming in net exports and a $6 billion hike in construction.

For Q4 GDP, AE expecta a $33 (was $27) billion net export subtraction after a $36.5 (was $37.5) billion Q3 addition.They expect a 3% Q4 contraction rate for exports after a 10.3% (was 10.1%) clip in Q3, and a 2% Q4 growth rate for imports after a 2.4% (was 2.1%) Q3 pace.

AE said the current account deficit should surge to $125.8 billion in Q4 from an estimated $112.1 billion in Q3 from $119.9 billion in Q2. The annual gap should widen to an expansion-high $490 billion in 2016 from a prior expansion-high $463 billion in 2015.

By Fred Canto