U.S. goods trade deficit slightly widens in November, net trade to be a drag on Q4 growth

The goods trade deficit in the United States slightly widened during the month of November, deeper than what markets had initially anticipated. Sluggishness in imports of capital and consumer goods remains a concern, given their importance in informing the strength of both business investment spending and private consumption.

The US November advance trade in goods report showed a modest widening in the deficit to USD65.3 billion on the month, versus USD61.9 billion in October. The widening is more pronounced when viewed against August (USD59.0 billion) and September (USD56.0 billion) data, figures released by the Bureau of Economic Analysis showed Thursday.

Exports of goods fell 1.0 percent m/m, with declines coming in a wide variety of categories including food and beverage (-3.0 percent), capital goods (-4.0 percent), automotive (-2.4 percent), and others (-8.5 percent). Only industrial supplies and consumer goods posted gains.

Goods imports rose by 1.2 percent in November, boosted by imports of food and beverages (+2.2 percent) and industrial supplies (5.3 percent). Imports of capital goods (-0.2 percent) and consumer goods (-0.3 percent) were modestly weaker on the month after both categories recorded solid increases in October.

"We remain watchful for signs that trends in these categories are incongruent with our outlook. In addition, the deficit in goods has widened in the first two months of the quarter relative to that seen in Q3. Hence, dependent on the remaining December data and services balance, it appears net trade will again be a drag on growth in Q4," Barclays commented in its latest research report.

Meanwhile, the dollar index traded at 102.39, down -0.28 percent, while at 3:00GMT, the FxWirePro's Hourly Dollar Strength Index remained neutral at 34.96 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex