U.S. trade deficit widens in September; exports at a five-month low

[November 04, 2014]  WASHINGTON, Nov 4 (Reuters) - The U.S. trade deficit unexpectedly widened in September as exports hit a five-month low, suggesting slowing global demand could undercut economic growth in the final three months of the year.

The Commerce Department said on Tuesday the trade gap increased 7.6 percent to $43.03 billion. August's trade deficit was revised to $39.99 billion from a previously reported $40.11 billion shortfall.

Economists polled by Reuters had forecast the deficit narrowing slightly to $40.00 billion. When adjusted for inflation, the trade deficit increased to $50.76 billion from $48.22 billion.

September's shortfall in the overall trade balance is bigger than the $38.1 billion deficit that the government had assumed in its advance gross domestic product (GDP) estimate for the third quarter published last week.

This suggests the 3.5 percent annual growth pace it estimated will probably be trimmed when the government publishes its revisions later this month. Trade was reported to have contributed 1.32 percentage points to GDP growth.
 

Exports in September fell 1.5 percent to $195.59 billion, the lowest since April, a sign that weakening demand in key markets such as China and the euro zone was starting to weigh.

Exports are likely to weaken further after a survey of U.S. manufacturers published on Monday showed a decline in a gauge of export order growth.

Apart from slowing global demand, export growth is seen crimped by a strong dollar, which has so far this year strengthened by about 4 percent against the currencies of the country's main trading partners.

The decline in exports in September was broad-based, with the exception of food and beverages, which rose. Exports to the European Union fell 6.5 percent in September, while those to China slipped 3.2 percent. Exports to Japan tumbled 14.7 percent. There were also declines in exports to Mexico and Brazil.

Overall imports were unchanged in September as petroleum imports hit their lowest level since November 2009. A domestic energy boom has seen the United States reduce its dependence on foreign oil, helping to temper the trade deficit.

Consumer goods imports, however, were the highest on record, as were non-petroleum imports. Imports from China also hit an all-time high, leaving the politically sensitive trade gap at $35.6 billion, the highest on record. Imports from Canada were the highest since July 2008.

(Reporting by Lucia Mutikani; Editing by Andrea Ricci)

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