U.S. trade deficit narrowed for the second straight month in October, dropping to USD 47.2 billion from September’s deficit of USD 51.1 billion. The rebound was slightly larger than consensus forecasts.
Goods exports dropped 0.6 percent in the month, building on September’s 1.4 percent fall. All goods categories except industrial supplies, recorded modest falls. Removing the effect of price changes, the story was similar; export volumes fell 0.5 percent, slightly less than September’s 1.2 percent fall.
Goods imports dropped as well, falling 2.1 percent, the same magnitude as September. Modest falls were seen in all categories except capital goods. However, consumer goods dropped 4.4 percent again in October, the second month of which new tariffs were imposed on largely consumer-centric goods imported from China. On a price-adjusted volumes basis, goods import dropped 2 percent. Services exports rose 0.5 percent in October, while services imports rose 0.2 percent.
“The drop in consumer goods imports likely reflects September's tariff hike that targeted consumer goods from China. Trade data will continue to remain volatile in the months ahead as the U.S. threatens new tariffs on its trading partners”, said TD Economics in a research report.
