Higher Oil Prices Widen US Trade Deficit

Canada's export sector shows sign of life, trade deficit shrinks

Good coming into the US from China, Mexico and the European Union all hit record levels, which boosted the trade gap to $48.7 billion - from $44.9 billion in September- and is the highest since President Trump took office in January.

The politically sensitive trade deficit in goods with China rose 1.7 percent to $35.2 billion from September to October and is up 7 percent this year to $309 billion. Consumer goods imports increased nearly $800 million, including a $303 million gain in cell phones and other household goods, as well as more inbound shipments of furniture, appliances, toys and clothing. October exports were $195.9 billion, down less than $0.1 billion from September exports.

Exports grew by 2.7 percent - the biggest month-on-month increase since March - in part due to higher shipments of energy products to the United States to make up for a recent drawdown in refinery inventories.

The Canadian dollar CAD=D4 initially edged up after the data, rising to C$1.2626 to the USA dollar, or 79.20 US cents, from C$1.2648, or 79.06 USA cents, before the data were released.

TD economist Dina Ignjatovic said the Bank of Canada is likely to look on the growth of exports as a positive sign for Canada's fourth quarter growth.

Trade experts have warned that President Trump's protectionist policies will reduce the amount the United States exports and will widen its trade deficit.

Year-to-date, the goods and services deficit increased $49.1 billion, or 11.9%, from the same period in 2016. He blames them on bad trade deals and abusive practices by China and other trade partners.

A healthy USA economy and a Canadian dollar hovering around the 80 United States cent mark are helping the export sector, she said in a note to clients. "Imports of industrial machinery fell by 1.9 per cent month over month in value terms and declined for the third time in four months".

Economists had expected a deficit of $2.7 billion for October, according to Thomson Reuters. Imports of drilling and oilfield equipment climbed by $304 million, and imports of cellphones rose by $303 million.

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