US goods trade deficit widens sharply in October

THE US trade deficit in goods widened sharply in October as exports declined amid slowing global demand and a strong dollar.

The goods trade deficit surged 7.7 per cent to US$99.0 billion last month, the Commerce Department said on Wednesday (Nov 30). Exports of goods dropped 2.6 per cent to US$173.7 billion.

There were decreases in exports of industrial materials and supplies, which include crude oil. Exports of consumer goods tumbled, but shipments of food and motor vehicles and parts increased.

The Federal Reserve’s aggressive interest rate hikes to quell inflation have boosted the dollar, making US-made goods expensive on the international market.

Goods imports rose 0.9 per cent to US$272.7 billion. A smaller trade deficit was one of the main drivers of economic growth in the third quarter. October’s sharp widening in the deficit suggested trade could be a drag on GDP this quarter.

The Commerce Department also reported that wholesale inventories increased 0.8 per cent in October after rising 0.6 per cent in September. Retail inventories fell 0.2 per cent after dipping 0.1 per cent in September. Motor vehicle stocks increased 0.4 per cent.

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Excluding motor vehicles, retail inventories slipped 0.4 per cent after dropping 0.9 per cent in September. This component goes into the calculation of GDP. Inventories subtracted from GDP growth in the third quarter. REUTERS