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Economic Report: U.S. trade deficit jumps to three-month high as strong dollar dents exports

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The numbers: The nation’s trade deficit jumped almost 12% in September to a three-month high of $73.3 billion, as falling oil prices and a strong dollar dented U.S. exports.

The deficit expanded from $65.7 billion in August, which was the smallest gap in a year and a half.

Economists polled by The Wall Street Journal had forecast a $72.3 billion shortfall.

Exports dropped 1.1% to $258 billion from a record $260.8 billion in the prior month. Imports rose 1.5% to $331.3 billion.

Key details: Exports of U.S. industrial supplies, oil, food, and soybeans all declined. Semiconductor exports rose.

The U.S. imported more cell phones, drugs, computer chips and aircraft.

Big picture: The trade deficit has fallen sharply from a record high earlier in the year, giving a boost to gross domestic product in the third quarter. Yet the U.S. is still on track to post another record trade gap in 2022.

Both imports and exports could slow in the months ahead, but for different reasons. The U.S. economy is expected to get weaker and reduce demand for imports. The strong dollar has also made American exports more expensive for foreign customers.

Looking ahead: “Imports are likely to falter again, as domestic demand continues to weaken,” said senior U.S. economist Michael Pearce of Capital Economics. “Export growth looks set to weaken further, as the stronger dollar and sharp downturn in economic growth in the rest of the world takes its toll.”

Market reaction: The Dow Jones Industrial Average
DJIA,
-0.77%

and S&P 500
SPX,
-1.13%

were set to open lower in Thursday trades. Stocks fell on Thursday after the Fed indicated it plans to raise interest rates higher than previously expected.

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