US trade deficit widens; labour market near full strength
WASHINGTON: A drop in US exports last month pushed the country’s trade deficit in goods higher while the number of Americans filing for unemployment benefits fell last week in a positive sign for the labour market.
The two reports released on Thursday suggested that when Donald Trump becomes America’s president next month, the labour market will likely be at roughly full strength and international trade could be weighing on the economy.
In an initial estimate that does not include trade in services, the Commerce Department said the country exported $1.2 billion less in November than in October. Imports rose by $2.2 billion during the month. The full trade report for November is due on January 6.
“It appears net trade will again be a drag” on economic growth in the fourth quarter, said Michael Gapen, an economist at Barclays in New York.
Further details in the report showed an increase in retail and wholesale inventories in November, which could provide a temporary boost to economic growth.
Trump campaigned heavily on promises to reduce America’s trade deficit and bring back jobs that moved abroad to countries with lower costs for manufacturing.
Working against him could be a stronger US dollar which could weigh on US exporters. The trade deficit for goods widened by $3.4 billion in November to $65.3 billion.
The dollar has surged about 5 per cent since Trump won the November 8 presidential election as investors bet wider budget deficits under his presidency will trigger higher inflation and more interest rate increases by the Federal Reserve. On Thursday, the dollar weakened and stocks rose slightly in light holiday-period trading.
Separately, initial claims for state unemployment benefits dropped 10,000 to a seasonally adjusted 265,000 for the week ended December 24, the Labour Department said.
It was the 95th straight week that claims were below 300,000, a threshold associated with a healthy labour market. That is the longest stretch since 1970, when the labour market was much smaller.
The department said in a statement there were no special factors affecting claims last week although estimating the data can be more difficult around holiday periods. The department said the actual number of claims was estimated by government staff for 10 states. — Reuters