The US trade deficit narrowed more than expected in September as oil import prices fell, and US consumer sentiment weakened slightly early this month, according to data on Thursday.
Taken together, the two reports sent mixed signals on the US economy, and did little to change the market outlook for monetary policy from the Federal Reserve.
The Commerce Department said the US trade gap totalled $64.3 billion in September, below Wall Street expectations for a $66 billion shortfall and down 6.8 percent from August.
The University of Michigan's preliminary reading on consumer sentiment in November was 92.3, down from October's 93.6, said sources who saw the subscription-only report. The median forecast of Wall Street economists polled by Reuters was for a reading of 93.6.
Oil import prices fell for the first time in five months to $62.52 per barrel in September from $66.12 in August, as the US summer driving season came to a close and oil inventories rose. The volume of oil imports also declined in September. However, the modest improvement in the deficit was not taken as signal of a trend of narrower deficits.
"The improvement was attributable to a decline in the price and volume of oil imported, while the trade deficit with China widened again - in the months ahead, oil imports will increase, and new record trade deficits will be set," said Peter Morici, economist and professor at the University of Maryland's Robert H. Smith School of Business. Other analysts said the trade numbers could prompt the Commerce Department to raise its reading of third quarter US economic growth.
"The number is going to add $4 billion to $5 billion to the third-quarter GDP in the next revision," putting growth at an annual rate of 1.8 percent from 1.6 percent originally reported, predicted Michael Englund, chief economist at Action Economics in Boulder, Colorado.
A second government report suggested falling oil prices could continue to help narrow the trade gap. US import prices fell 2 percent in October, or twice as much as analysts expected, due mainly to an 8.3 percent drop in petroleum prices, a Labour Department report showed.
DEFICIT WITH CHINA GROWS Imports of high-technology products rose to a record $26.2 billion and imports from China increased 3.3 percent to a record $27.6 billion. The trade deficit with China also widened 4.6 percent to a record $23.0 billion.
The year-to-date trade deficit with China totalled $166.3 billion, keeping it on a pace to easily surpass last year's record of $202 billion. Also, the number of US workers applying for jobless benefits fell to 308,000 last week, according to data on Thursday.
Data from the Commerce Department showed inventories at US wholesalers rose by a larger-than-expected 0.8 percent in September, while sales fell for the first time in nearly a year. Analysts polled by Reuters projected wholesale inventories - unsold stocks held by US businesses or companies for resale to retailers - to rise 0.5 percent after a 1.2 percent August gain.
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