U.S. advance goods trade deficit widens in October on rise in imports and fall in exports

The U.S. advance goods trade deficit widens in October. The goods trade deficit widened to USD 77.2 billion from USD 76.3 billion a month earlier, driven by a rise in imports and a decline in exports. The consensus expectations were for USD 77 billion.

The goods deficit has been widening for five straight months, mainly because of stronger imports. This is in line with the view that a fiscal stimulus led boost to demand is likely to encourage higher imports, and consequently lead to wider trade deficits in 2018 and in 2019, noted Barclays in a research report.

Total exports dropped 0.3 percent sequentially, driven by the foods, feeds & beverage category, and a more modest decline in capital goods. The consistent fall in exports of feeds, feeds & beverages marks a complete reversal of the spike seen in the second quarter, which was likely a tariff-related move.

On the imports side, total imports rose 0.4 percent sequentially, rising for the sixth straight month. While imports of consumer goods, foods & feeds and other goods saw healthy rises, imports of capital goods and industrial supplies fell, which might signify some moderation in business investment.

Meanwhile, the preliminary estimates for October wholesale and retail inventories were released today, surprising to the upside. Wholesale inventories were up 0.7 percent sequentially, while retail inventories rose 0.9 percent.

At 15:00 GMT the FxWirePro's Hourly Strength Index of US Dollar was highly bullish at 140.833. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex