US trade balance widening beyond expectations - Nomura

Analysts at Nomura noted that the October Advance Economic Indicators report released by the Census Bureau showed that the goods trade balance widened in October to -$62.0bn from-$56.5bn in September, wider than expected (Nomura: -$57.6bn, Consensus: -$59.0bn).

Key Quotes:

"Imports were broadly in line with our expectations, increasing by 1.1 m-o-m on a nominal basis but exports unexpectedly dropped by -2.7% m-o-m. The slowdown in exports was broad-based, with all major export categories reporting a decline. In particular, foods, feeds, and beverage exports fell again in October, declining by 11.8% following a 12% decline in the prior month."

"This slowdown likely reflects some normalization in food exports after a surge in agricultural exports boosted overall exports in August. In addition to the advanced goods trade balance, the Census Bureau released the preliminary estimates for wholesale and retail inventories for October. Both categories dropped sharply by 0.4% m-o-m, suggesting inventory investment slowed in October. 

Q4 GDP tracking update: Taking today’s developments into account (i.e., wider-thanexpected trade balance and weaker-than-expected inventory growth), we lower our Q4 GDP tracking estimate by 0.4pp to 1.4% from 1.8%."