The US trade deficit increased in October as exports fell amid declining shipments of soybeans and other goods, suggesting that trade would be a drag on growth in the fourth quarter.
The Commerce Department said on Tuesday that the trade gap widened 17.8 percent to $42.6 billion. September's trade deficit was revised slightly down to $36.2 billion.
Economists polled by Reuters had forecast the trade gap increasing to $41.8 billion in October after a previously reported $36.4 billion shortfall. When adjusted for inflation, the deficit rose to $60.3 billion from $54.2 billion in September.
Exports contributed 0.87 percentage point to the third quarter's annualized 3.2 percent annualized rate of increase in the gross domestic product. The jump in exports in the last quarter largely reflected a surge in soybean shipments after a poor harvest in Argentina and Brazil.
While the reversal in soybean shipments, which is weighing on exports, suggests that trade is likely to subtract from GDP growth in the fourth quarter, consumer spending and a firming housing market are expected to keep supporting the economy.
Rising gas and oil well drilling in response to increasing oil prices is also expected to boost growth this quarter.