By Jeffry Bartash, MarketWatch
The numbers: The nation’s trade deficit in goods fell almost 6% in October to a 17-month low in what was probably a temporary dropoff tied to the dispute with China and resulting U.S. tariffs.
The trade gap in goods fell to $66.5 billion in October from a revised $70.5 billion in the prior month, according to advanced figures released by the government .
Economists surveyed by MarketWatch had forecast a $71.8 billion gap
Even with the big drop in October, the U.S. is still likely to post the biggest trade deficit in 2019 in 11 years.
The advanced report also revealed an 0.2% increase in wholesale inventories in October and a 0.3% gain in retail inventories.
All three advanced figures suggest gross domestic product could be higher in the fourth quarter than Wall Street has been forecasting.
What happened: Imports of foreign-made goods declined by $5 billion to $201.8 billion in October, likely reflecting a recent pattern of up-and-down figures depending on the timing of new U.S. tariffs on China.
Companies rushed to import consumer goods in August before scheduled U.S. tariffs went into effect and that appears to explain the decline in imports in October.
Exports of U.S. goods slipped by a smaller $900 million to $135.3 billion.
Most trading between countries involves goods such as autos, airplanes, oil, chemicals, electronics, clothing and the like.
The full October trade report comes out next week and includes services. The U.S. has run a surplus for years in services such as banking, tourism and entertainment, but they reflect a smaller portion of overall trade. The services balance doesn’t change much from month to month.
In September the total U.S. trade deficit was $52.5 billion.
Big picture: The U.S. has run large trade deficits for years and nothing has really changed despite on-and-off efforts to reduce them. Even though Trump administration tariffs have caused Chinese imports to decline, imports from other countries have risen.
Higher deficits subtract from gross domestic product, though rising inventories add to GDP.
What they are saying? “A smaller trade deficit and an increase in inventories in October both work toward raising [fourth-quarter] GDP growth,” said chief economist Stephen Stanley of Amherst Pierpont Securities.
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