Today’s U.S. trade report was
The deficit widened more than expected to -$41.8 billion in September, an 8% MUM increase. The consensus was for -$39 billion.
Exports declined by $US0.4 billion. Imports climbed $US2.7 billion.
As a result, analysts are saying this means Q3 GDP estimates need to come down.
The latest data translates to “a deterioration in the real trade in goods deficit to $US50.4bn from $US47.4bn, a weaker net trade position than the BEA had assumed in its initial estimate of Q3 GDP,” writes Barclays’ Peter Newland. “As a result, our Q3 GDP tracking estimate declined by 0.2pp to 2.6%.”
Here’s Newland’s tracking table showing his current estimate based on available Q3 data:
Capital Economics’ Paul Ashworth also revised down his Q3 GDP forecast, to 2.5%.
“Looking at the assumptions the BEA made for trade when constructing the first estimate of third-quarter GDP, the statisticians were correct about imports, so that won’t be revised. However, they were too optimistic about goods exports. They assumed a 4.7% q/q annualised gain when it actually came in at 2.4%. The upshot is that GDP growth should be revised down to about 2.5% in the second estimate, from the first estimate of 2.8%.”
Not everyone was so gloomy. TD Securities’ Millan Mulraine says the data is more a reflection of overseas weakness and a stronger dollar.
“Despite the disappointing headline print, the underlying tone of this trade report paints a fairly encouraging picture on domestic activity, with the broad-based gains in imports reflecting continued buoyancy in domestic demand. However, the softening in export activity reinforces the narrative of an unsupportive global backdrop and reflects the drag on export activity from the strengthening US dollar”.
The next big economic data point is the