With the value of imports increasing at a faster pace than the value of exports in September, the Commerce Department released a report on Friday showing that the U.S. trade deficit widened by much more than expected.
The report showed that the trade deficit widened to $36.5 billion in September from a revised $30.8 billion in August. Economists had been expecting the deficit to widen to $31.8 billion from the $30.7 billion originally reported for the previous month.
While the trade deficit for September is much narrower the $60.1 billion deficit recorded in the same month a year ago, it still marked the widest deficit since January.
A notable increase in the value of imports contributed to the wider than expected deficit, with the value of imports jumping 5.8 percent to $168.4 billion in September from $159.1 billion in August. The growth was partly due to an increase in the value of petroleum imports.
The increase in the value of imports outpaced the increase in the value of exports, which rose 2.9 percent to $132.0 billion in September from $128.3 billion in August. Nonetheless, the value of exports still rose for the fifth consecutive month.
Commenting on the data, Peter Boockvar, equity strategist for Miller Tabak, said, "Because of the math of how GDP is calculated, the greater than expected deficit, with all else being equal, will lead to a reduction by up to four tenths of a percent to third quarter GDP."
The report also showed that the wider deficit came as the goods deficit widened to $47.6 billion in September from $42.0 billion, while the services surplus was nearly unchanged from the previous month at $11.1 billion.
Additionally, the Commerce Department said that the politically sensitive trade deficit with China widened to $22.1 billion in September from $20.2 billion in August.
The massive trade deficit with China is likely to be a subject of discussion as President Barack Obama embarks on his first trip to Asia as president.
In other trade-related news, the U.S. Labor Department revealed that import prices climbed 0.7 percent in October following a revised 0.2 percent increase in September. Excluding a 1.8 percent increase in fuel import prices, import prices were up 0.4 percent.
Export prices advanced by 0.3 percent in October after a revised 0.2 percent slide in September. The rebound in export prices came even though agricultural export prices fell by 1.0 percent.
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