Washington, Safar 22, 1437, Dec 4, 2015, SPA — The U.S. trade deficit widened unexpectedly in October as exports fell to a three-year low due to a weak global economy and stronger dollar, the government reported Friday, suggesting that trade could limit economic growth in the fourth quarter.
The Commerce Department said the trade deficit widened 3.4 percent to $43.9 billion in October, compared to a $42.5 billion deficit the previous month.
Total exports fell 1.4 percent to $184.1 billion, while exports of goods plunged 2.4 percent to $123.8 billion, the lowest level since mid-2011. Food exports fell to a more than three year low, while exports of industrial supplies and materials were the weakest in five years. Petroleum exports fell to their lowest level since late 2010.
Imports fell 0.6 percent to $228 billion in October. Imports of industrial supplies and materials fell to the lowest level in more than six years. Petroleum imports were the smallest since late 2003, reflecting increased domestic energy production and lower oil prices.
The October trade deficit with Mexico jumped 10.2 percent to $33 billion, the biggest deficit with the southern neighbor in more than three years. The deficit with China fell 9.1 percent to $33 billion, but still was the largest imbalance with any country.
A rising trade deficit limits economic growth. Trade subtracted 0.22 percentage point from gross domestic product (GDP) in the third quarter, which expanded at a 2.1 percent annual rate. The dollar’s 18.6 percent gain against other major currencies since June 2014 has eroded export growth by making U.S. goods more expensive overseas and foreign goods cheaper domestically.
Through October, the trade deficit this year is 5.3 percent higher than the same period a year ago. Economists expect the deficit will continue to expand next year as U.S. exporters continue to struggle with the strong dollar and weak overseas economic growth.
18:25 LOCAL TIME 15:25 GMT