Merchandise imports from China declined 4.8 per cent from the prior month to US$35.3 billion while exports tumbled 17 per cent to US$7.49 billion, the least in almost a year, Commerce Department data showed Thursday. The gap narrowed to a seasonally adjusted US$27.8 billion, a seven-month low.

The overall U.S. deficit in goods and services trade narrowed to US$47.2 billion in October, less than the median estimate of US$48.5 billion median estimate of economists surveyed by Bloomberg. The U.S. typically runs a services surplus and merchandise deficit, a shortfall that President Donald Trump has assailed as unfair.

American and Chinese negotiators have signaled that they may be drawing closer to agreeing on phase one of a broader accord, though Trump has said that he wouldn't mind if it takes until after the 2020 election and that a threatened Dec. 15 tariff increase will proceed if the talks fail to yield a deal he likes.

The report showed exports and imports both dropped and gave a hint of the impact of trade on fourth-quarter gross domestic product. While net exports have weighed on growth for the last two quarters, a sustained pullback in imports could help to reverse that trend. Some forecasters raised GDP projections last week after the advance trade report showed a narrower goods gap.

Jobless Claims

A separate report from the Labor Department Thursday showed filings for U.S. unemployment benefits fell last week to a seven-month low of 203,000, below all estimates in Bloomberg's survey of economists.

Fluctuating trade policy and the surrounding uncertainty has depressed overall trade with China this year. In the first 10 months of 2019, merchandise imports from China are down 14.4 per cent and exports to the country have dropped 13.6 per cent. The year-to-date U.S. goods deficit with China has narrowed to a seasonally adjusted US$294.2 billion from the same 10 months of 2018, the report showed.

Overall U.S. exports shrank 0.2 per cent to US$207.1 billion, with soybean shipments plunging 42 per cent and declines in trucks and aircraft engines. Imports dropped 1.7 per cent to US$254.3 billion on decreases in consumer goods, autos and crude oil.

Inflation-adjusted petroleum exports rose to a record US$23.9 billion, narrowing the real trade gap for petroleum to US$4.1 billion. In nominal terms, the surplus for the category jumped to US$780 million, further boosting America's new status as a net exporter.

While trade with China has lagged, goods imports from the European Union rose to a record and purchases from Russia hit a five-year high, on an unadjusted basis.