2016.11.0700:30:00UTC+00U.s. Trade Deficit Narrows in September, Services Imports Likely to Stabilize in Q4

U.S. nominal trade deficit for the month of September narrowed more than consensus projections in September. The country’s trade balance came in at –USD 36.4 billion, as compared with expectations of a deficit of USD 38 billion. Nominal exports rose 0.6 percent on a sequential basis, continuing with the bolstering trend that started in June 2016. Both goods and services exports increased in September.

On the other hand, imports dropped 1.3 percent month-on-month as imports of services and goods both dropped in the month. In particular, services imports were weak, dropping 2.4 percent sequentially, its biggest fall since the recession. Charges for the use of intellectual property rights dropped 27.1 percent in the month, mainly driving the imports down. This is possibly a correction after the surge of 37.7 percent in this series in August.

Imports of services are expected to stabilize in the fourth quarter after the intellectual property rights–induced volatility in August and September, noted Barclays in a research note. But the softness in goods imports is viewed as posing certain risks on the downside to the near-term outlook for investment and consumer spending, added Barclays. The real goods deficit in the U.S. dropped to USD 55 billion.

The U.S. trade report for the month of September maintained the third quarter GDP tracking estimate at 3 percent after rounding, said Barclays.