WASHINGTON - The U.S. trade deficit unexpectedly widened in October to a record as imports accelerated and exports declined for the second month in a row, the Commerce Department said Thursday.
The shortfall in goods and services grew to $25.9 billion, from $24.2 billion during September, in part because the deficits with Japan and China each widened to a record $7.2 billion. Analysts had expected a $24.4 billion trade gap in October.
Importers "are scrambling to meet demand," said Astrid Adolfson, an economist at MCM MoneyWatch in New York. "Consumers have the wherewithal to spend. Shippers say demand hasn't dropped one iota. In fact, it could be picking up."
On Thursday the Labor Department reported that the number of U.S. workers filing for state unemployment benefits fell last week to the lowest level in 26 years. First-time jobless claims declined 29,000, to a seasonally adjusted 266,000, for the week that ended Dec. 11, the Labor Department said.
"Stronger consumer demand isn't good news" for inflation-wary Federal Reserve policymakers, said Christopher Low, chief economist at First Tennessee Capital Markets in New York. He expects the central bank to raise interest rates early in the new year to slow economic growth.
The decline in U.S. exports could be curtailing factory output in eastern Pennsylvania, southern New Jersey, and Delaware, numbers from the Federal Reserve Bank of Philadelphia indicated. The bank's manufacturing index fell to 8.6 in December, from 15.8, reflecting slower growth in orders and shipments. Still, the outlook for next year is positive, the survey showed.
The trade report showed that imports rose 1.6%, to a record $107.9 billion in October, the 10th consecutive month without a decline in shipments from abroad. The increase was led by computers and consumer goods and higher-priced oil imports.
- Bloomberg News