The US trade balance surprisingly blew out in October, increasing from $44.9 billion to $48.7 billion, as unexpectedly exports decreased and imports increased despite the ongoing dollar weakness, missing estimates of $47.5 billion. October's number was tied for the widest deficit going back to early 2012...
... and marks a stark divergence with the recent dollar weakness which would suggest an improvement in US trade data.
Broken down by components, the goods deficit increased $3.8 billion in October to $69.1 billion. The services surplus decreased less than $0.1 billion in October to $20.3 billion.
Exports of goods and services decreased less than $0.1 billion, or less than 0.1 percent, in October to $195.9 billion. Exports of goods decreased $0.3 billion and exports of services increased $0.3 billion.
- The decrease in exports of goods mostly reflected decreases in foods, feeds, and beverages ($1.3 billion) and in capital goods ($1.2 billion). An increase in industrial supplies and materials ($2.6 billion) partly offset the decreases.
- The increase in exports of services mostly reflected increases in financial services ($0.1 billion) and in other business services ($0.1 billion), which includes research and development services; professional and management services; and technical, trade?related, and other services.
Imports of goods and services increased $3.8 billion, or 1.6 percent, in October to $244.6 billion. Imports of goods increased $3.5 billion and imports of services increased $0.3 billion.
- The increase in imports of goods mostly reflected increases in industrial supplies and materials ($1.8 billion), in other goods ($1.1 billion), and in consumer goods ($0.8 billion).
- The increase in imports of services mostly reflected an increase in transport ($0.3 billion).
Broken down by region, the October figures show surpluses, in billions of dollars, with South and Central America ($3.9), Hong Kong ($2.3), Brazil ($1.1), Singapore ($0.7), Saudi Arabia ($0.3), and
United Kingdom ($0.2). Deficits were recorded, in billions of dollars, with China ($31.9), European Union ($12.0), Mexico ($6.0), Japan ($5.9), Germany ($5.3), Italy ($2.7), South Korea ($2.7), India ($2.1), Canada ($1.9), OPEC ($1.6), France ($1.6), and Taiwan ($1.6).
- The deficit with China increased $2.1 billion to $31.9 billion in October. Exports decreased $0.8 billion to $10.6 billion and imports increased $1.2 billion to $42.5 billion.
- The deficit with the European Union decreased $2.5 billion to $12.0 billion in October. Exports increased $1.4 billion to $25.0 billion and imports decreased $1.1 billion to $37.0 billion
- The balance with members of OPEC shifted from a surplus of $0.6 billion to a deficit of $1.6 billion in October. Exports decreased $0.9 billion to $4.3 billion and imports increased $1.3 billion to $5.9 billion.
Needless to say, Trump who has repeatedly voiced his displeasure with the soaring US trade deficit, will not be happy, and may pressure the Fed to weaken the dollar even further to boost US exports.
As for the immediate impact on US economic data, expect this number to subtract approximately 0.3% from Q4 GDP, pushing the consensus estimate into the lower 2% range.