WASHINGTON (Reuters) – The U.S. 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.
FILE PHOTO: Shipping containers are loaded onto a ship at Yusen Terminals (YTI) on Terminal Island at the Port of Los Angeles in Los Angeles, California, U.S., January 30, 2019. REUTERS/Mike Blake
Still, consumer spending is likely to remain supported by a strong labor market. Other data on Thursday showed the number of Americans filing claims for unemployment benefits unexpectedly dropped last week, hitting their lowest level in seven months.
The reports countered data this week showing manufacturing activity contracting for a fourth straight month in November, a slowdown in growth in the services sector as well as a decline in construction spending in October. The latest data suggested the economy was growing at a moderate pace rather than stall speed.
The Commerce Department said the trade deficit tumbled 7.6% to $47.2 billion, the smallest since May 2018, as both imports and exports of goods declined. It was the second straight monthly fall in the trade bill and the percent drop was the biggest since January.
But 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.