Trade Gap Narrows, Small Upward Revision of Q3 Likely
The trade gap narrowed in September to $64.3 billion from $69.0 billion in the prior month. The advance estimate of real GDP may have to be raised slightly higher than the 1.6% increase. This view could be revised after retail sales and inventories numbers are published next week.
Exports of goods and services increased 0.5% in September, reflecting gains in exports of aircraft and petroleum. A significant part of the improvement came from exports of petroleum.
Imports of goods and services dropped 2.1% in September due to a reduction in imports of petroleum, autos, and capital equipment.
The trade deficit widened during September vis-à-vis China ($23.0 billion vs. $22.0 billion), but narrowed vis-à-vis Canada ($5.7 billion vs. $6.1 billion in August) and Mexico ($6.2 billion vs. $5.8 billion), Japan ($6.7 billion vs. $7.4 billion), and Europe Union ($7.0 billion vs. $11.0 billion).
Prices of Imports Excluding Fuels Show Moderation
The import price index dropped 2.0% in October, matching the price decline seen in September. During both these months, lower prices for imported petroleum accounted for the decline in the import price index. Excluding fuels, the import price index fell 0.1% in October after a 0.2% gain in September. On a year-to-year basis, the price index of imports excluding fuels rose 2.5% in October after gains of 2.9% and 2.8% in August and September. The deceleration of this price index indicates that inflation from imports is not a serious threat.
Jobless Claims Decline, But Evidence Is Inadequate
Initial jobless claims dropped 20,000 to 308,000 during the week ended November 4 taking the four-week moving average to 311,000. Continuing claims, which lag initial claims by one week, rose 43,000 to 2.448 million and the insured unemployment rate moved up one notch to 1.9%. These readings are not supportive of a significant improvement in the labor market, but they suggest that layoffs may have dropped. We need additional strong declines in initial jobless claims to infer that firms hiring at a rapid pace.
