US trade deficit hits 10-year high; job growth slowing

WASHINGTON: The US trade deficit jumped to a 10-year high in October as soybean exports dropped further and imports of consumer goods rose to a record high, suggesting the Trump administration’s tariff-related measures to shrink the trade gap likely have been ineffective.

Other data showed private employers hired fewer workers than expected in November, pointing to a moderation in the pace of job growth. That was reinforced by another report showing a small decline in the number of Americans filing claims for unemployment benefits last week.

The reports added to weak housing and business spending on equipment data in signaling a slowdown in economic growth. Concerns over the health of the economy have roiled financial markets in recent days. The Commerce Department said the trade deficit increased 1.7 percent to $55.5 billion, the highest level since October 2008. The trade gap has now widened for five straight months. Data for September was revised to show the deficit rising to $54.6 billion instead of the previously reported $54.0 billion.

The politically sensitive goods trade deficit with China surged 7.1 percent to a record $43.1 billion in October. The United States is locked in a bitter trade war with China. Washington has imposed tariffs on $250 billion worth of Chinese imports to force concessions on a list of demands that would change the terms of trade between the two countries.

China has responded with import tariffs on US goods, including soybeans. President Donald Trump has long railed against China’s trade surplus with the United States, and accuses Beijing of not playing fairly on trade. In addition to the duties on Chinese goods, Washington has slapped tariffs on steel and aluminum imports into the United States this year. On Saturday, Trump and Chinese President Xi Jinping agreed to hold off on imposing more tariffs for 90 days while they negotiate a deal to end the trade dispute.

The truce appeared to be in doubt on Thursday following the arrest in Canada for extradition to the United States of Meng Wanzhou, the chief financial officer of Chinese technology giant Huawei Technologies Co Ltd and the daughter of its founder.

“We remain skeptical of a substantial trade deal,” said Jake McRobie, a US economist at Oxford Economics in New York. Economists polled by Reuters had forecast the overall trade deficit rising to $55.0 billion in October. When adjusted for inflation, the goods trade deficit increased to $87.9 billion in October from $87.2 billion in September. The so-called real trade deficit is above the average for the third quarter.

Trade subtracted 1.91 percentage points from GDP growth in the July-September quarter. Growth estimates for the fourth quarter are around a 2.8 percent annualized rate. The economy grew at a 3.5 percent pace in the third quarter.

US stocks were trading sharply lower as Wanzhou’s arrest sparked fears of a flare-up in Sino-US tensions. Prices of US Treasuries were trading higher while the dollar was weaker against a basket of currencies. In October, exports of goods and services slipped 0.1 percent to $211.0 billion. Soybean exports, which have been targeted by China in the trade dispute and have been dropping for the last several months, fell $0.8 billion. Exports of civilian aircraft and engines also fell. —Reuters LONDON: Britain’s top stock index rose on Friday after a tumultuous week, supported by a rally in oil stocks after OPEC and Russia agreed to cut output, but investors also fretted about next Tuesday’s key parliamentary vote on Brexit.

The FTSE 100 rebounded from Thursday’s plunge to gain 1.1 percent, but put in its worst weekly performance in two months as jitters over Britain’s divorce from the European Union, the US-China trade war and worries about global growth sapped confidence in the UK market.

The British parliament is due to vote next Tuesday on Prime Minister Theresa May’s Brexit deal amid expectations that it will be rejected, prolonging the uncertainty over Britain’s future relations with its biggest trading partner.

Financials, consumer stocks and oil majors boosted the index. Oil stocks rallied after OPEC and its Russia-led allies agreed to slash output by more than the market had expected even as Washington ramps up pressure to reduce the price of crude.

BP rose 2.3 percent, Shell was up 3 percent for its best day since June, while mid-caps Premier Oil had its biggest daily gain since July 2017 and Tullow Oil jumped 7.4 percent.

Still, many investors and analysts remained unconvinced that the gains represented a change in sentiment. “Are people going to put new cash to work convincingly now, thinking this is the low? I can’t see there’s any urgency to do that now really,” said Ian Williams, analyst at Peel Hunt.

“It does look like a bounce from an extreme technical oversold level, but I don’t think it means we’re out of the woods yet by any means,” he said.

Shares in Associated British Foods fell 4.6 percent after the Primark owner said trading at its budget fashion chain was challenging in November.

“The next three weeks will be critical, and there may be a chance to reverse the trend if the weather normalizes,” Credit Suisse analysts said. Marks & Spencer shares also eased 0.3 percent, as traders said Primark’s weaker performance reflected broader challenges for retail.

Shire fell 1.6 percent, among the worst-performing FTSE 100 stocks. Japan’s Takeda Pharmaceutical, the company acquiring Shire, suffered a 5 percent slide in its shares overnight.

Mid-caps saw some big moves. Intellectual-property investment firm IP Group’s shares fell 5.4 percent after Jefferies cut its rating on the stock to “underperform” from “hold”.

“Against our earlier hopes for secondtier portfolio companies to step up to diversify dependence on Oxford Nanopore, hopefuls have largely failed to deliver, the listed portfolio drags and the market remains largely uninterested ominously with the next significant funding beginning to loom,” Jefferies analysts said. Real estate company Daejan Holdings sank 5.6 percent after its firsthalf results. Shares in tour operator Thomas Cook fell a further 5.4 percent, having suffered sharp falls this week.

Genus fell 5.9 percent after the company announced a placing of 3 million new shares. On their first day of trading, shares in retail investment platform AJ Bell surged 37.5 percent. The firm’s IPO valued it at 651 million pounds. — Reuters