WASHINGTON, Dec 14: The US trade deficit surged in October to a record $68.9 billion, led by a jump in oil imports, the government said on Wednesday. The deficit, up 4.4 per cent from the prior month, was far ahead of the average analyst estimate of a 62.8-billion-dollar gap.
The deficit with China widened to a record $20.5 billion in October compared with $16.8 billion in the same month last year.
The trade gap widened despite the largest increase in exports since March, a decline in the price of oil and a substantial rebound in aircraft exports.
The worsening deficit will be a drag on economic growth in the fourth quarter. Economists already expect growth to slow from the 4.3 per cent pace in the third quarter.
The big trade gap could also weigh on the dollar as a sign of the growing outflow of currency.
Marie-Pierre Ripert at IXIS Corporate and Investment Bank said the trade deficit “is likely to narrow somewhat in November as the decline in oil prices could trigger a decrease in imports.”
But she added: “Today’s figures suggest that net exports are likely to weigh on GDP (gross domestic product) growth in the fourth quarter. In the medium term, we do not expect any improvement in trade deficit figures. For such a trend, exports would have to grow much more rapidly than imports, which are highly unlikely.”
For the first 10 months of the year, the trade gap is $598.3 billion. This is just below the record 617.6-billion-dollar annual deficit set last year, meaning that it will be easily broken next month.
In October, imports rose faster than exports.
Imports increased 2.7 per cent to $176.4 billion, while exports rose 1.7 per cent to $107.5 billion.
Imports of goods alone rose three per cent to $149.1 billion. The largest increase came in imports of industrial supplies, especially energy products.
The petroleum deficit widened 8.8 per cent to a record $24.3 billion.
Despite a drop in the average price of oil, the quantity of crude imports rose to 304.5 million barrels.
The US maintained a small surplus in services of five billion dollars, which was more than offset by the deficit in goods of $73.9 billion.—AFP
