US September trade deficit highest in four months

The US trade gap widened eight per cent in September, to a greater-than-expected $41.78bn - its highest in four months. In August, it stood at $38.7bn. It was predicted to widen marginally to $38.9bn.

Exports declined, with nominal exports dropped by 0.2 per cent month-on-month, while imports increased by 1.2 per cent. Paul Ashworth, chief US economist at Capital Economics, says the widening suggests third-quarter GDP growth will need to be revised lower, to about 2.5 per cent, from the first estimate of 2.8 per cent.

He continues:

The decline in exports would have been even worse if not for a 14.2% m/m surge in food & beverage exports. Otherwise, the decline was widespread, with consumer goods, capital goods and industrial supplies all in decline. It is possible that the Federal government shutdown played a role here, restricting export licenses and access to trade credit, but given the lack of any notable impact on other economic data releases, we're not convinced it played a big role.

The solid gain in imports was led by a 3.4% m/m jump in automotive imports, but the strength was fairly widespread across all categories.