WASHINGTON: The US trade deficit widened in October as exports fell to their lowest level in three years amid a slowing global economy and a strong dollar, official data showed Friday.
The trade gap widened to US$43.9bil (RM184.4bil) in October from an upwardly revised September reading of US$42.5bil (RM178.5bil).
Exports fell faster than imports, another sign of the cause of weakness in the struggling US manufacturing sector, as the strong dollar makes exports relatively more expensive and lacklustre global growth weakens demand.
Exports dropped 1.4% to US$184.1bil (RM773.2bil) as all categories of goods exports fell, from industrial supplies and materials, down to a five-year low, to capital goods, automobiles and consumer goods.
Services exports, including transport and financial services, increased modestly.
The growing shortfall cast a cloud over the US economy as it entered the fourth quarter, as a fall in exports subtracts from gross domestic product growth.
“The October trade report is consistent with our view that soft international demand and the strong dollar will lead net exports to continue to act as a headwind to GDP growth over the next several quarters,” said Barclays Research analyst Jesse Hurwitz.
Despite the strong dollar boosting American consumers’ buying power, imports slipped 0.6% to US$228.0bil (RM957.6bil).
The decline was seen in both goods and services, with imports of industrial supplies and materials the leading the pullback.
The trade gap in petroleum products shrank to US$4.1bil, its lowest level since 1999, reflecting the boom in US natural gas and shale oil production, and falling oil prices.
Over the first 10 months of the year, the trade gap rose to US$22.2bil, a gain of 5.3% from the same period in 2014.
The October widening of the deficit came as the politically sensitive trade gap with China shrank about 9% to US$33.0bil, according to data not seasonally adjusted.
Officials and businesses have long complained that the Chinese government keeps its yuan currency undervalued to gain an unfair advantage for its exports, while the US Treasury recently has softened the tone of its pressure.
The trade gap with the 28-nation European Union jumped 12.7% to US$13.3bil as the two trade partners negotiate a broad free-trade pact.
With Canada, the largest US trade partner, the trade balance swung into a modest surplus of US$252mil after a US$2.1bil deficit in September.
The disappointing trade data came as the Labour Department, in a separate report, said the economy added a solid 211,000 jobs in November and revised upward the jobs growth in the previous two months. The unemployment rate held steady at 5.0%, a seven-year low.
Jim O’Sullivan, chief US economist at High Frequency Economics, said the bigger trade deficit posed a speed bump for the US economy’s momentum.
“Despite the drag from trade, overall growth still looks strong enough to generate ongoing labour market improvement,” O’Sullivan said. – AFP
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