WASHINGTON – The U.S. trade deficit widened in October, reflecting a slowdown in exports and an increase in imports of oil and other foreign goods.
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The foreign-trade gap in goods and services expanded 8.6% from the prior month to a seasonally adjusted $48.73 billion in October, the Commerce Department said Tuesday. Economists surveyed by The Wall Street Journal had expected a narrower deficit of $47.5 billion.
Imports rose 1.6% in October from the prior month, and exports were little changed.
The U.S. imported more barrels of crude oil in October compared with the prior month, and at a higher average price. Increased imports of consumer goods, including cell phones, also contributed to the month's rise. Exports were largely unchanged in October because the U.S. exported fewer soybeans and civilian aircraft than it had in September, offset by more exports of industrial supplies and materials.
Several powerful late-summer hurricanes may have affected trade data for recent months, though the Commerce Department said the "effects generally cannot be isolated."
International trade data can be volatile from month to month. In the first ten months of 2017, the value of U.S. imports rose 6.5% and exports increased 5.3% compared with the first ten months of 2016. The overall trade deficit widened 11.9% so far this year compared with the same period in 2016.
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World trade flows have grown this year, as global economies are growing in sync and at nearly the best paces since the recession.
Strong U.S. consumer spending, buoyed by a tight labor market and sky-high confidence, has also helped drive the recent ramp-up in imports.
"Stronger domestic demand will generate an increase in imports while U.S. exports are projected to continue growing modestly. That is, while U.S. domestic demand will strengthen, foreign producers will supply an increased share," said Mickey Levy and Roiana Reid, economists at Berenberg Capital Market, in a note to clients on Monday.
The dollar has weakened this year, making U.S.-produced products cheaper for foreign consumers. Indeed, many U.S. exporters have seen boosted profits in 2017 as a result.
Historically speaking, the U.S. imports more good than it exports, but runs a modest trade surplus for services. Economists attribute the chronic trade deficit the U.S. has faced for decades to Americans consuming more than they produce relative to the rest of the world's economies.
Narrowing this trade deficit has been one of President Donald Trump's priorities since taking office, and he has turned a critical eye toward trade agreements made among multiple countries.
The White House is attempting to renegotiate the North American Free Trade Agreement, but has said it could walk away from the pact with Mexico and Canada if it can't broker what the administration sees as a better deal. Mr. Trump also pulled the U.S. out of the Trans-Pacific Partnership in early 2017, a pact that would have bound closer together the economies of 12 nations.
The Commerce Department report on trade can be found at http://www.census.gov/ft900.
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(END) Dow Jones Newswires
December 05, 2017 08:45 ET (13:45 GMT)