U.S. trade deficit widens to 4-month high in October, likely to weigh on Q4 growth

Trade deficit in the United States widened to a 4-month high during October, following drop in exports of soybeans and as residents raised their imports of consumer goods.

The U.S. trade grew to USD42.6 billion from the prior month’s revised USD36.2 billion, data released by the Commerce Department showed Tuesday. The 17.8 percent increase from September was the largest since March 2015. The Bloomberg survey median called for a USD42 billion shortfall.

Exports contributed 0.87 percentage point to the third quarter's 3.2 percent annualized rate of increase in gross domestic product. The jump in exports in the last quarter largely reflected a surge in soybean shipments to China after a poor harvest in Argentina and Brazil.

Further, a second report from the Commerce Department on Tuesday showed new orders for manufactured goods rose 2.7 percent in October after increasing 0.6 percent in September. Imports rose 1.3 percent to USD229 billion, reflecting the largest inflow of merchandise since September of last year. The value of telecommunications gear, pharmaceuticals and mobile phones entering the U.S. in October increased.

The report also showed the trade gap with China, the world’s second-biggest economy, narrowed to USD31.1 billion from USD32.5 billion as U.S. exports to the nation were the strongest since December 2013. Also, trade deficits with European Union nations, Japan and Mexico increased in October from a month earlier.

Meanwhile, the dollar index is trading at 100.52, up 0.04 percent, while at 6:00GMT, the FxWirePro's Hourly Dollar Strength Index remained neutral at 0.97 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex