US goods and services trade gap shrank nearly 12% in October from September to US$73.8 billion (RM328.68 billion) as companies imported less consumer goods and business equipment.

(Dec 5): The US trade deficit narrowed in October from a more than two-year high as companies dialed back imports of consumer goods and business equipment.

The nation’s goods and services trade gap shrank nearly 12% from the prior month to US$73.8 billion (RM328.68 billion), Commerce Department data showed Thursday. The median estimate in a Bloomberg survey of economists called for a US$75 billion shortfall.

The value of imports fell 4% to US$339.6 billion, a four-month low. The drop exceeded a 1.6% decline in exports. The figures aren’t adjusted for inflation.

The figures illustrate a downshift in demand for foreign merchandise after companies recently doubled up efforts to ensure they were well-stocked ahead of holiday-shopping season against a backdrop of a potential dockworkers strike.

Early next year, there’s a risk the trade deficit will widen if companies accelerate imports to avoid tariffs that President-elect Donald Trump has promised to impose. Moreover, the recent strength in the US dollar, which makes US-made goods more expensive to foreign customers, has the potential of keeping the trade deficit wide.

The October trade data showed that in addition to a decline in imports of consumer and capital goods, the value of inbound shipments of industrial supplies, motor vehicles and foods also fell. The drop in US goods exports was also broad across categories. Exports of services increased to a record US$95.1 billion, with gains in most categories.

While goods and services trade in the third quarter subtracted from gross domestic product, the latest net exports figures suggest less of an impact in the final three-month period of the year.

On an inflation-adjusted basis, the merchandise trade deficit narrowed to US$92.4 billion in October.

Digging Deeper

• Travel exports — or spending by visitors to the US — rose 1.6% to a record US$18.4 billion
• Travel imports — a measure of Americans travelling abroad — climbed 5.1%, also to a record
• The US merchandise-trade deficit with China narrowed to a seasonally adjusted US$25.5 billion. The value of goods imported from China dropped to a four-month low
• The goods shortfall with Mexico narrowed slightly

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