Trade Goods Balance Deficit On Low Side Of Expectations

The goods balance returned a $66.53 billion deficit in October, down quite sharply from a marginally larger revised $70.55 billion in September and comfortably on the low side of market expectations. Compared with a year ago, the red ink fell by some 12.6 percent.

However, the monthly headline improvement reflected a contraction in both sides of the balance sheet. Hence, exports were off a further 0.7 percent after a slightly shallower revised 1.3 percent drop in September while imports decreased a steeper 2.4 percent following a 2.1 percent slide last time. Within the former, the main area of weakness was consumer goods (minus 4.0 percent) alongside foods, feeds and beverages (minus 3.0 percent) and autos (minus 2.4 percent). In line with the previous month, this last category was probably again adversely impacted by the GM strike which did not conclude until late in the period. Imports showed broad-based declines led by autos (minus 5.9 percent) and consumer goods (minus 4.8 percent).

Net exports provisionally had a small positive impact on economic growth in the third quarter; today's update holds out hope of another favourable contribution in the fourth quarter. With the Fed paying particularly close attention to developments in global trade, this report is unlikely to dent expectations for no change in monetary policy at next month's meeting.