US trade gap widens; productivity up 3.1%

Factory orders rise 2.7 pct in October

WASHINGTON, Dec 6, (AP): The US trade deficit climbed in October from its lowest monthly level in nearly three years. Imports of consumer goods such as medicine, cell phones and clothing increased, while exports of soybeans, gold and artwork tumbled_which fueled the monthly widening of the trade gap.

The Commerce Department said Tuesday that the deficit rose to $42.6 billion in October, up 17.8 percent from September. The $36.2 billion trade deficit in September was the lowest since December 2013.

Reducing the trade deficit has become a primary focus of President-elect Donald Trump. Trump cites the trade imbalance as evidence that the United States has to signed misguided trade agreements that have hurt US economic growth and cost jobs.

In the wake of an agreement last week to keep 800 jobs at the Carrier furnace factory in Indianapolis from going to Mexico, Trump has promised to lower corporate tax rates to preserve factory jobs inside the United States, while threatening harsh penalties for companies that produce goods overseas to save on labor costs. On Twitter, Trump warned that he will impose a 35 percent tariff on the goods imported by companies that outsource production.

So far this year, the trade deficit is running 2.1 percent below its 2015 levels. The United States has been exporting more food but fewer industrial supplies, oilfield equipment, autos and consumer goods.

But the country has also cut back on imports of steel, oil, aircraft, computer accessories and televisions, among other goods, leading to a narrowing of the overall trade deficit.

In a separate report, the productivity of American workers rose in the July-September quarter at the fastest pace in two years while labor costs slowed after a big jump in the spring.

Productivity increased in the third quarter at a 3.1 percent rate, the Labor Department reported Tuesday. That followed three quarterly declines and was the best showing since a 4.2 percent increase in the third quarter of 2014. Labor costs edged up at a 0.7 percent rate in the third quarter following a much faster 6.2 percent jump in the second quarter.

The productivity figure was unchanged from an initial estimate a month ago while the 0.7 percent rise in unit labor costs was slightly higher than an initial estimate of a 0.3 percent gain.

The rebound in productivity was expected to be temporary.

Economists believe the jump in productivity in the summer will be shortlived. They are forecasting that productivity will return to the anemic gains seen over the past nine years. Since 2007, annual productivity increases have averaged just 1.3 percent. That is just have the 2.6 percent average gains turned in from 2000 through 2007 when the country was benefiting from the increased efficiency from greater integration of computers and the internet into the workplace.

Meanwhile, Orders to US factories rose in October by the largest amount in 16 months but a key category that tracks business investment posted an anemic gain.

Factory orders increased 2.7 percent in October, the best showing since a 2.9 percent rise in June 2015, the Commerce Department said Tuesday.