Trade Deficit Widened in October as Inventories Declined

When it comes to international trade, the United States has been running a deficit for decades. The Friday after Thanksgiving is a day when most people in America are not working, but there is still some economic reporting and market activity to consider. One example is the Department of Commerce report on international trade.

October’s deficit was $62.0 billion, up $5.5 billion from September. Bloomberg was calling for the deficit to be just $59.7 billion, while the Econoday estimates ranged from $56.9 billion to $61.4 billion.

This was a wider deficit than all estimates but there are two considerations here — the first is that trade deficits almost never move the market (even if that is sad), and the second is that October economic reports were ahead of the election surprise.

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The Commerce Department showed that exports of goods for October were $122.1 billion, $3.4 billion less than September. Imports of goods for October were $184.1 billion, $2.1 billion more than September. In short, exports were down 2.7% while imports increased 1.1%.

Other measurements were seen in advance wholesale inventories and in retail inventories. Both posted a drop — with wholesale inventories down 0.4% to $586 billion and retail inventories down 0.4% to $603.3 billion.

The biggest decline in exports was an 11.8% drop in foods, feeds and beverages in October. That came after an even sharper 12% drop in September. Industrial supplies (including petroleum) fell by 4.1% in October, after rising by 1.5% in September. Capital goods were down just 0.1% in October, having risen by some 3.7% in the prior month. Consumer goods exports also declined by 5.9% after rising by 4.6% the prior month.

While these export numbers may look awful on a monthly basis, they were not that bad on an annual basis. The  foods, feeds and beverages figure for October was actually up 10.9% from a year ago. Total exports were down just 0.4% from a year earlier. Some of this may be attributable to the strong dollar as well.

Again, the report on international trade in goods just doesn’t move the market even if it is a political hot button.