WASHINGTON: The US trade deficit dropped to its lowest level in nearly 1-1/2 years in October, suggesting trade could contribute to economic growth in the fourth quarter, though a fall in imports of consumer goods hinted at a slowdown in domestic demand.
The decreases in imports and exports suggested the White House's"America First" agenda, marked by a 17-month trade war with China, was reducing trade flows, which in the long run is detrimental to domestic and global growth.Data for September was revised to show the trade gap shrinking to US$51.1 billion instead of the previously reported US$52.5 billion. Economists polled by Reuters had forecast the trade gap narrowing to US$48.7 billion in October.
President Donald Trump has defended the tariffs as necessary to protect domestic manufacturers from what he says is unfair foreign competition. Trump has accused trading partners, including China, the European Union, Brazil and Argentina of devaluing their currencies at the expense of US manufacturers.
There are, however, no signs the trade war is significantly impacting the labour market. In a third report, the Labour Department said initial claims for state unemployment benefits dropped 10,000 to a seasonally-adjusted 203,000 for the week ended Nov 30, the lowest level since mid-April. When adjusted for inflation, the goods trade deficit decreased US$3.9 billion to US$79.1 billion in October, also the smallest gap since May 2018.
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