Trade Deficit Grows More Than Expected As Stronger Dollar Pressures Exports

The U.S. monthly international trade deficit increased in October 2016 according to the U.S. Census Bureau, rising from $36.2 billion in September (revised lower from $36.4 billion) to $42.6 billion in October, higher than the $41.8BN consensus estimate, as exports decreased and imports increased which was to be expected following the recent surge in the US Dollar. The goods deficit increased $6.3 billion in October to $63.4 billion. The services surplus decreased $0.1 billion in October to $20.8 billion.

Breaking down the main trade categories, exports of goods and services decreased $3.4 billion, or 1.8 percent, in October to $186.4 billion. Exports of goods decreased $3.5 billion and exports of services increased $0.1 billion.

The decrease in exports of goods reflected decreases in foods, feeds, and beverages ($1.4 billion), in industrial supplies and materials ($1.0 billion), and in consumer goods ($0.9 billion).

The increase in exports of services mostly reflected an increase in transport ($0.1 billion), which includes freight and port services and passenger fares.

At the same time, imports of goods and services increased $3.0 billion, or 1.3 percent, in October to $229.0 billion. Imports of goods increased $2.8 billion and imports of services increased $0.2 billion.

The increase in imports of goods mostly reflected increases in consumer goods ($2.4 billion) and in capital goods ($1.1 billion). A decrease in automotive vehicles, parts, and engines ($0.7 billion) partly offset the increases.

The increase in imports of services reflected an increase in transport ($0.2 billion).

Broken down by country, the October figures show surpluses, in billions of dollars, with Hong Kong ($2.6), South and Central America ($1.8), Singapore ($1.3), and Brazil ($0.1). Deficits were recorded, in billions of dollars, with China ($28.9), European Union ($12.9), Mexico ($5.8), Japan ($5.8), Germany ($4.7), India ($2.4), Italy ($2.2), OPEC ($2.1), Canada ($1.7), France ($1.6), South Korea ($1.4), Taiwan ($1.0), United Kingdom ($0.7), and Saudi Arabia ($0.2).