THE US trade deficit narrowed in October from a more than two-year high as companies dialled back imports of consumer goods and business equipment.
The nation’s goods and services trade gap shrank nearly 12 per cent from the prior month to US$73.8 billion, Commerce Department data showed on Thursday (Dec 5). The median estimate in a Bloomberg survey of economists called for a US$75 billion shortfall.
The value of imports fell 4 per cent to US$339.6 billion, a four-month low. The drop exceeded a 1.6 per cent decline in exports. The figures aren’t adjusted for inflation.
The figures illustrate a downshift in demand for foreign merchandise after companies recently doubled up efforts to ensure they were well-stocked ahead of holiday-shopping season against a backdrop of a potential dockworkers strike.
Early next year, there’s a risk the trade deficit will widen if companies accelerate imports to avoid tariffs that President-elect Donald Trump has promised to impose. Moreover, the recent strength in the US dollar, which makes US-made goods more expensive to foreign customers, has the potential of keeping the trade deficit wide.
The October trade data showed that in addition to a decline in imports of consumer and capital goods, the value of inbound shipments of industrial supplies, motor vehicles and foods also fell. The drop in US goods exports was also broad across categories. Exports of services increased to a record US$95.1 billion, with gains in most categories.
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While goods and services trade in the third quarter subtracted from gross domestic product, the latest net exports figures suggest less of an impact in the final three-month period of the year.
On an inflation-adjusted basis, the merchandise trade deficit narrowed to US$92.4 billion in October.
Spending by visitors to the US, also known as travel exports, rose by 1.6 per cent to a record US$18.4 billion. Meanwhile, travel imports, which measure Americans travelling abroad, increased by 5.1 per cent, also reaching a record high.
The US merchandise-trade deficit with China narrowed to a seasonally adjusted US$25.5 billion, as the value of goods imported from China fell to a four-month low. Additionally, the goods shortfall with Mexico saw a slight decrease. BLOOMBERG
