USA trade deficit widens as exports hit three-year low
Missing analysts’ expectations, the trade deficit widened from Can$2.3 billion (US$1.7 billion) in September to Can$2.8 billion (US$2.1 billion) in October, as exports decreased 1.8 percent and imports fell 0.8 percent, said statistics Canada.
Exports dropped 1.4 percent to 184.1 billion as shipments of goods such as industrial supplies and materials and petroleum products sank to a five-year low. Exports of services increased by $0.4 billion to $60.3 billion, largely due to an increase in freight and port services, passenger fares, and financial services.
“Following September’s real GDP report, Canada’s trade balance is just one more indicator that suggests the economy is losing momentum”, she said.
Imports of goods and services were also down in October, dropping 0.6 percent to $228 billion.
Desjardins Capital Markets economist Jimmy Jean said the October trade report was a disappointment, particularly because of the widespread decline in exports.
The trade gap in petroleum products shrank to $4.1 billion, its lowest level since 1999, reflecting the boom in USA natural gas and shale oil production, and falling oil prices.
The trade deficit with Mexico, meanwhile, rose to the highest level in three years.
Officials and businesses have long complained that the Chinese government keeps its yuan currency undervalued to gain an unfair advantage for its exports, while the US Treasury recently has softened the tone of its pressure.
Imports of goods fell $1.0 billion to $186.8 billion, as imports of industrial supplies and materials fell by $2.0 billion.
THE TAKEAWAY: A rising trade deficit acts as a drag on overall growth.