US goods trade deficit widens in October, inventories fall

The US goods trade deficit increased sharply in October and inventories declined broadly, which could temper expectations of strong economic growth in the fourth quarter.

The Commerce Department said on Tuesday the goods trade gap jumped 6.5 per cent to US$68.3 billion last month amid an increase in imports of industrial supplies, consumer and other goods.

Exports fell 1.0 per cent, weighed down by decreasing shipments of food, motor vehicles, capital and consumer goods. The government will publish its comprehensive trade report, which includes services, next week.

The Commerce Department also reported that wholesale inventories fell 0.4 per cent in October after edging up 0.1 per cent in September. Retail inventories slipped 0.1 per cent after declining 0.9 per cent in September.

Retail inventories, excluding motor vehicles and parts, the component that goes into the calculation of gross domestic product increased 0.4 per cent last month after dipping 0.1 per cent in September.

The trade and inventory data could prompt economists to lower fourth-quarter GDP estimates, which range as low as a 2.5 per cent annualized rate to as high as a 3.4 per cent pace.

Trade added four-tenths of a percentage point to the economy’s 3.0 per cent annualized growth rate in the third quarter. Inventory investment contributed 0.73 percentage point to output in the July-September quarter.