The numbers: The trade deficit in goods widened 7.7% in October to a five-month high of $99 billion, as a strong dollar and weakening global economy dented U.S. exports.
The trade gap in goods rose from $91.9 billion in the prior month, the Census Bureau said. Exports fell 2.6% and imports rose 0.9%.
The trade gap in goods is still sharply lower, however, compared to a record $125.6 billion deficit in March.
Higher trade deficits subtract from gross domestic product, the official scorecard for the economy.
An advanced estimate of wholesale inventories, meanwhile, showed a 0.8% increase in October. Yet retail inventories slipped 0.2% in the month, according to an early estimate.
Big picture: The trade deficit usually doesn’t reveal much about the health of the economy, but it’s had an unusually large effect on GDP this year.
A record gap early in the year triggered a decline in GDP in the first quarter. Then a shrinking deficit gave a huge boost to third-quarter economic growth.
The meandering trade deficit is only expected to have a muted effect on fourth-quarter GDP, however.
Key details: Imports of goods rose slightly to $272.7 billion in October. The U.S. imported more autos and industrial supplies.
Imports tend to rise ahead of the holiday shopping season.
Exports fell to $173.7 billion, a seven-month low. The U.S. exported fewer consumer goods and industrial supplies, likely reflecting a decline in oil prices.
A strong dollar and weak growth in other countries is hurting American exporters and is likely to have a mild negative effect on GDP for the foreseeable future.
Looking ahead: “Trade will likely be modestly negative for growth through the rest of the year and in 2023 as slowing global growth and a deteriorating global economic outlook weigh on exports,” said Abbey Omodunbi, senior economist at PNC Financial Services.
Market reaction: The Dow Jones Industrial Average
DJIA,
and S&P 500
SPX,
were set to open mixed in Wednesday trades.
