Goods Portion Pushes Trade Deficit Deeper Than Expected

The goods portion of September's trade deficit is deeper than expected, at $76.0 vs expectations for $74.7 billion. This swells the third-quarter monthly average to a $74.5 billion goods deficit which compares very unfavorably with the second quarter's monthly average of $66.7 billion. The second-quarter was a very good quarter for trade, representing 1.2 percentage points of the quarter's 4.2 percent GDP pace but today's results point to an unwanted reversal for the third quarter.

Goods imports surged 1.5 percent in September and reflect 3.6 percent monthly jumps for both capital goods (and though negative for the trade balance is a plus for business investment) but also consumer goods which are the central weakness of the nation's trade.

The gain in imports overshadows a very strong 1.8 percent jump in exports where strength includes industrial supplies, capital goods, vehicles and also consumer goods. But showing yet another heavy decline are exports of foods, feeds & beverages, down 8.9 percent in September following a 9.2 percent plunge in August. These declines could very well be tangible effects of tariffs.

Whatever the early effects of tariffs may be, the nation's trade picture deteriorated noticeably in the third quarter. Country balances aren't posted with the advance report but will follow with next week's international trade report that will also include data on services.