The numbers: The U.S. trade deficit rose 5% in October to a three-month high of $64.3 billion largely because of a reject in exports of American-made cars and COVID-related drugs.
Higher deficits subtract from gross domestic product, the official scorecard for the U.S. economy.
Key details: Imports inched up 0.2% in October to $323 billion, mostly because of higher demand for computers and equipment to drill for oil.
Imports are well off their 2022 peak, however, due to a shift in spending by U.S. consumers from goods to services such as leisure and recreation.
U.S. exports, meanwhile, fell 1% in October to a $258.8 billion, though they remained close to a record high.
Big picture: The U.S. is still on track to report the smallest annual enhance in its trade deficit in three years.
Imports had surged to a record high in 2022 owing to strong consumer spending. Now a weakening economy brought about by higher U.S. interest rates has sapped demand and helped to reduce the trade deficit.
That’s likely to continue to be the case in the months ahead as the Federal Reserve keeps interest rates high to make sure high inflation is under control.
Looking ahead: “Despite the widening in the trade deficit in October, net trade looks set to be only a modest drag on fourth-quarter GDP growth,” said deputy chief U.S. economist Andrew Hunter of Capital Economics.
Market reaction: The Dow Jones Industrial Average
DJIA,
and S&P 500
SPX,
were set to open higher in Wednesday trades.
