U.S. goods trade deficit falls in September, inventories mixed

The U.S. goods trade deficit fell in September as trade tensions restricted the flow of goods, but that will probably not change expectations of further deceleration in economic growth in the third quarter. The Commerce Department said on Monday the goods trade gap dropped 3.6% percent to $70.4 billion last month. Exports declined 1.6%, pulled down by plunges in shipments of foods and feeds, as well as automobiles. Goods imports tumbled 2.3% amid decreases in imports of industrial supplies, capital goods, motor vehicles, and consumer goods.

The Commerce Department also reported retail inventories rose 0.3% in September after dropping 0.2% in the prior month. Retail inventories, excluding motor vehicles and parts, the component that goes into the calculation of gross domestic product gained 0.3% after slipping 0.2% in August. But wholesale inventories dropped 0.3% last month after being unchanged in August.

Data this month showed a cooling in job growth in September and retail sales dropping for the first time in seven months. Manufacturing output also declined last month in part as a strike at General Motors' depressed auto production. The economy is losing momentum largely because of a 15-month trade war between the United States and China, which has sapped business confidence and undermined capital expenditure. The waning stimulus from last year's $1.5 trillion tax cut package is also constraining growth.

According to a Reuters survey of economists, GDP likely increased at a 1.7% annualized rate in the third quarter. The economy grew at a 2.0% rate in the second quarter, slowing from the January-March quarter's brisk 3.1% pace. The government will publish its snapshot of third-quarter GDP on Wednesday.