US trade deficit widens in October

The US trade deficit widened in October to $78.2bn from $74.1bn in September, according to data released on Tuesday by the Commerce Department.

This marked the second consecutive increase after contracting for the prior six months.

Exports fell by $1.9bn, while imports rose by $2.2bn, as a decline in consumer goods imports was offset by a rebound in industrial supplies and other goods imports.

Matthew Martin, US economist at Oxford Economics, said October's increase in imports was concentrated in industrial supplies and materials as well as the other goods category, while consumer goods offset some of the increase, with many retailers having pulled in goods early to avoid supply disruptions.

"Large declines in exports of goods, namely industrial supplies and materials and consumer goods, was partially offset by a strong increase to exports of services, driven by travel and transport," he said.

He added: "The pattern may be set for the near-term trade outlook, with waning global demand for US goods weighing more heavily on exports relative to improved imports, which continue to be supported by a strong dollar and resilient consumer spending.

"After contributing positively in Q3, trade will likely pose a modest drag to GDP growth for the remainder of the year, though the increases to the deficit should continue to be more moderate than September's increase."