U.S. trade deficit widens as exports hit 5-month low in September

(Reuters) – 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 on Tuesday the trade gap increased 7.6 percent to $43.03 billion. Economists had forecast the shortfall at $40.00 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 on 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 euro zone was starting to weigh.

Exports are likely to weaken further after a survey of U.S. manufacturers published on Monday showed a decline in a gauge of export order growth.