REUTERS

(REUTERS)

Trade Gap Widens More-than-Expected in September

Politics Reuters

The U.S. trade deficit widened more than expected in September as imports rose to their highest level in almost a year, which could probably see third-quarter growth estimates trimmed.

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The Commerce Department said on Thursday the trade gap increased 8.0 percent to $41.8 billion, the largest since May. August's shortfall on the trade balance was revised slightly to $38.7 billion from the previously reported $38.8 billion.

Economists polled by Reuters had expected the trade deficit to widen a bit to $39.0 billion in September.

When adjusted for inflation, the trade gap widened to $50.4 billion, the largest since May, from $47.4 billion the prior month. This measure goes into the calculation of gross domestic product.

The increase in the so-called real trade deficit in September suggested the government will probably lower its initial third-quarter GDP estimate.

Trade contributed 0.31 percentage point to the economy's 2.8 percent annualized growth pace in the July-September quarter.

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The three-month moving average of the trade deficit, which irons out month-to-to month volatility, increased to $39.7 billion in the three months to September from $37.3 billion in the prior period.

The trade deficit had held steady since plunging in June as both domestic and global demand remained sluggish.

Exports of goods and services slipped 0.2 percent to $188.9 billion in September. That was the third straight month of declines.

Imports rose 1.2 percent to $230.7 billion, the highest level since November last year. Imports of automobiles and parts were the highest on record.

But with consumer spending having slowed significantly, some of the imported goods could end up piling up in warehouses. That could make businesses reluctant to keep on rebuilding stocks and the slowdown in inventory accumulation would undercut fourth-quarter GDP growth.

Imports from China increased in September, lifting the contentious U.S. trade deficit with China to a record $30.5 billion.