This is Why the US Trade Deficit is Widening

Mish Shedlock |

Exports and imports are both down again this month. Exports decreased more, though, so the result is a widening of the trade deficit. The Bloomberg Econoday Consensus was for a balance of $ -40.6 billion. The actual number was $ -43.9 billion, at the top end of the range of expectations.
The nation's trade deficit came in at the high end of expectations in October, at $43.9 billion with details reflecting oil-price effects but also soft foreign demand. Exports fell 1.4 percent in the month while imports, pulled down by oil, fell 0.6 percent. The decline for goods exports, at 2.5 percent, is in line with last week's advance data but not for imports where goods declined 0.6 percent, vs the advance reading of minus 2.1 percent. Exports of services are once again solid at plus 0.7 percent.

Low prices for oil held down imports of both crude and industrial supplies. Imported crude averaged $40.12 per barrel in the month vs $42.72 in September and, in a reminder of the commodity price collapse, vs $88.47 a year ago. Turning to finished goods, however, imports do show gains with capital goods up as well as autos and consumer goods. Country data show a narrowing with China to $33.0 billion, which ends five straight months of widening, and a widening with the EU to $13.4 billion.

This report is mixed, confirming weakness abroad but showing some life at home. But, with exports down, the data do point to a slow start for fourth quarter GDP.

The Report is Not "Mixed"

Given that imports subtract from GDP, the report is not "mixed". Nor does a chart of imports and exports appear to be "mixed". Nor can anyone look at the following and see "signs of life".

Commerce Details

Let's dive into the Commerce Release on U.S. International Trade for October 2015 for additional details.

The U.S. Census Bureau and the U.S. Bureau of Economic Analysis, through the Department of Commerce, announced today that the goods and services deficit was $ 43.9 billion in October, up $ 1.4 billion from $ 42.5 billion in September, revised. October exports were $184.1 billion, $ 2.7 billion less than September exports. October imports were $ 228.0 billion, $1.3 billion less than September imports.

Goods and Services Three-Month Moving Averages

The average goods and services deficit in creased $0.5 billion to $45.1 billion for the three months ending in October.
  • Average exports of goods and services decreased $1.4 billion to $185.0 billion in October.
  • Average imports of goods and services decreased $0.9 billion to $230.1 billion in October.
Year-over-year, the average goods and services deficit in creased $2.6 billion from the three months ending in October 2014.
  • Average exports of goods and services decreased $11.7 billion from October 2014.
  • Average imports of goods and services decreased $9.1 billion from October 2014.

International Trade Balance October 2013 - October 2015


International Trade Balance Moving Average

In a "mixed" report, signs of life are imaginary.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Comments

Emerging Growth

AfterMaster Inc

Studio One Media Inc is a diversified media and technology company. It is engaged in the development and commercialization of proprietary, edge audio and video technologies for professional and consumer…

Private Markets

Almond Smart Home Router by Securifi

Securifi sells user friendly touch screen routers that also have support for IoT/home automation.Securifi’s Almond revolutionized wireless router setup with its easy to use Touchscreen Interface in 2012. Now our…

Dropbox, Inc.

Dropbox is a service that allows their users to bring all photos, docs, and videos anywhere, and share them easily. Any file saved to Dropbox will automatically save to all…