WASHINGTON -- The U.S. trade deficit unexpectedly widened in September as exports hit a five-month low, suggesting slowing global demand could undercut economic growth in the final three months of the year.
The Commerce Department said Tuesday the trade gap increased 7.6 percent to $43.03 billion. Economists had forecast the shortfall at $40 billion in September.
"The disappointing performance in export activity suggests that the loss of export competitiveness from the strong dollar and the weak global backdrop are becoming a net drag on U.S. economic activity," said Millan Mulraine, deputy chief economist at TD Securities in New York.
The trade deficit was bigger than the $38.1 billion gap that the government had assumed in its advance gross domestic product estimate for the third quarter published last week.
The weak trade data came on the heels of a report Monday showing a decline in construction spending in September.
Economists said the two reports combined suggested that the third-quarter 3.5 percent annual growth pace could be cut by as much as half a percentage point when the government publishes its revisions later this month.
Trade was reported to have contributed 1.32 percentage points to GDP growth.
U.S. financial markets were little moved by the trade data.
In another report, the Commerce Department said orders for factory goods fell for second straight month in September. Relatively firm domestic demand, however, is expected to keep U.S. factories humming.
Exports in September fell 1.5 percent to $195.59 billion, the lowest since April, a sign that weakening demand in key markets such as China and the eurozone was starting to weigh.
Exports are likely to weaken further after a survey of U.S. manufacturers published Monday showed a decline in a gauge of export order growth.
Apart from slowing global demand, export growth is seen crimped by a strong dollar, which so far this year has strengthened by about 4 percent against the currencies of the country's main trading partners.
The decline in exports in September was broad-based, with the exception of food and beverages, which rose.
Exports to the European Union fell 6.5 percent in September, while those to China slipped 3.2 percent. Exports to Japan tumbled 14.7 percent. There were also declines in exports to Mexico and Brazil.
Overall imports were unchanged in September as petroleum imports hit their lowest level since November 2009. A domestic energy boom has seen the United States reduce its dependence on foreign oil, helping to temper the trade deficit.
Declining crude oil prices, which hit a seven-month low in September, are also helping to put downward pressure on the value of petroleum imports.
Consumer goods imports, however, were the highest on record, as were non-petroleum imports. Economists were disappointed with the stall in imports, but were encouraged by the rise in consumer goods imports as this was a sign domestic demand was holding firmer.
"The stronger dollar isn't doing much to spur consumer demand for goods outside of the U.S. borders," said Jennifer Lee, an economist at BMO Capital Markets in Toronto.
Imports from China hit an all-time high, leaving the politically sensit
9 Numbers That'll Tell You How the Economy's Really Doing
U.S. Trade Gap Widens, Factory Orders Fall in September
The gross domestic product measures the level of economic activity within a country. To figure the number, the Bureau of Economic Analysis combines the total consumption of goods and services by private individuals and businesses; the total investment in capital for producing goods and services; the total amount spent and consumed by federal, state, and local government entities; and total net exports. It's important, because it serves as the primary gauge of whether the economy is growing or not. Most economists define a recession as two or more consecutive quarters of shrinking GDP.
The CPI measures current price levels for the goods and services that Americans buy. The Bureau of Labor Statistics collects price data on a basket of different items, ranging from necessities like food, clothing and housing to more discretionary expenses like eating out and entertainment. The resulting figure is then compared to those of previous months to determine the inflation rate, which is used in a variety of ways, including cost-of-living increases for Social Security and other government benefits.
The unemployment rate measures the percentage of workers within the total labor force who don't have a job, but who have looked for work in the past four weeks, and who are available to work. Those temporarily laid off from their jobs are also included as unemployed. Yet as critical as the figure is as a measure of how many people are out of work and therefore suffering financial hardship from a lack of a paycheck, one key item to note about the unemployment rate is that the number does not reflect workers who have stopped looking for work entirely. It's therefore important to look beyond the headline numbers to see whether the overall workforce is growing or shrinking.
The trade deficit measures the difference between the value of a nation's imported and exported goods. When exports exceed imports, a country runs a trade surplus. But in the U.S., imports have exceeded exports consistently for decades. The figure is important as a measure of U.S. competitiveness in the global market, as well as the nation's dependence on foreign countries.
Each month, the Bureau of Economic Analysis measures changes in the total amount of income that the U.S. population earns, as well as the total amount they spend on goods and services. But there's a reason we've combined them on one slide: In addition to being useful statistics separately for gauging Americans' earning power and spending activity, looking at those numbers in combination gives you a sense of how much people are saving for their future.
Consumers play a vital role in powering the overall economy, and so measures of how confident they are about the economy's prospects are important in predicting its future health. The Conference Board does a survey asking consumers to give their assessment of both current and future economic conditions, with questions about business and employment conditions as well as expected future family income.
The health of the housing market is closely tied to the overall direction of the broader economy. The S&P/Case-Shiller Home Price Index, named for economists Karl Case and Robert Shiller, provides a way to measure home prices, allowing comparisons not just across time but also among different markets in cities and regions of the nation. The number is important not just to home builders and home buyers, but to the millions of people with jobs related to housing and construction.
Most economic data provides a backward-looking view of what has already happened to the economy. But the Conference Board's Leading Economic Index attempts to gauge the future. To do so, the index looks at data on employment, manufacturing, home construction, consumer sentiment, and the stock and bond markets to put together a complete picture of expected economic conditions ahead.