INSTANT VIEW: U.S. trade deficit widened in Sept

NEW YORK (Reuters) - The U.S. trade deficit widened in September by an unexpectedly large 18.2 percent, the most in more than 10 years, as oil prices rose for the seventh straight month and imports from China bounded higher, a U.S. government report showed on Friday.

KEY POINTS: * The monthly trade gap grew to $36.5 billion, from a slightly revised estimate of $30.8 billion in August. Wall Street analyst had expected the shortfall to grow modestly in September to around $31.65 billion. * Both U.S. exports and imports had their best month since December 2008. But in a sign of renewed U.S. economic growth, imports grew 5.8 percent in September, the biggest monthly gain since March 1993, while exports rose 2.9 percent. * Imports of industrial supplies and materials showed the biggest gain, suggesting that U.S. manufacturers are ramping up for production.

COMMENTS:

JAY BRYSON, GLOBAL ECONOMIST, WELLS FARGO ADVISORS,

CHARLOTTE, NORTH CAROLINA:

"Obviously it is a wider trade deficit. The exports numbers were actually pretty good. It's the fifth consecutive months that exports have risen, so that tells us the recovery is going on in the rest of the world. Imports were up, and it was kind of broad based -- part of it was oil, and autos were up with dealers restocking from cash for clunkers, so this is perhaps reflective of some stronger domestic demand here in the United States. The government assumed a smaller deficit when they made their Q3 GDP number, so this number by itself would shave off about 0.4 percentage points from the growth figure."

ROBERT MACINTOSH, CHIEF ECONOMIST, EATON VANCE CORP,

BOSTON:

"To really get rid of the trade deficit, even though it's a lot better now because of the recession than it used to be, you still need more of an adjustment. If the dollar wants to go down, then it's going to go down. I think it's that simple.

Import surge: "That may not be a bad thing necessarily. It may mean that we're finally starting to ramp up our factories here, to restock the shelves. Inventories are so low that whenever people do start to spend or companies start to invest, if you don't have the goods on the shelves, you're going to miss out on sales.

"Somewhere along the way our factories are going to have to ramp up a bit, and they may be importing raw materials... As far an absolute increase, it's not that much, it's looks bigger on a percentage basis because you have a lower base."

STEVEN WOOD, CHIEF ECONOMIST, INSIGHT ECONOMICS, DANVILLE,

CALIFORNIA:

"The trade deficit widened in September as both exports and imports increased strongly. Since peaking in July 2008, both exports and imports retreated rapidly through April 2008, reflecting the swiftness and severity of the global economic meltdown and the disruptions in trade financing. However, both exports and imports hit bottom and have begun to recover in recent months, suggesting that the disruptions from the global economic recession and credit market turmoil have greatly eased. Real net exports subtracted 0.5 percentage points from Q3 GDP in the advance report; these data suggest that real net exports will subtract 0.9 percentage points from Q3 GDP when the second estimate of Q3 GDP is released in 2 weeks."

LOU BRIEN, MARKET STRATEGIST, DRW TRADING, CHICAGO:

"This is the biggest month-over-month percentage increase in a decade. This would put a little pressure on the dollar. This will certainly take at least a couple of tenths of a percentage point off the third-quarter GDP."

ZACH PANDL, ECONOMIST, NOMURA SECURITIES, NEW YORK:

"I think the story is that for specific companies the rebound in global growth is really positive because it means strong demand."

"Although overall trade volumes are likely to improve overall and the contribution of U.S. growth is likely to be negative, with import growth outpacing exports.

"The positive contribution that you're getting from exports is being more than offset by the leakage from imports.

"Better growth is not necessarily positive for us exports."

TOM SIMONS, MONEY MARKET ECONOMIST, JEFFRIES & CO., NEW YORK:

"It's a pretty good number today. Back in the dark days you had the balance narrowing quite a bit because both exports and imports were crashing, and now we see the balance widening out a little bit."

"The Fed is going to be on hold for a considerable period unless a lot of numbers come out like this over the next months... They would need to see data like this for at least the next six months in order to say 'OK we need to start tightening policy.'"

TIM GHRISKEY, CHIEF INVESTMENT OFFICER, SOLARIS ASSET

MANAGEMENT, BEDFORD HILLS, NEW YORK:

"Interesting data, certainly not as expected. Trade balance getting worse than expected, the reason for that is a surprise in that with the weak dollar you would think exports would be stronger and imports pricier and therefore weaker. But those realities didn't impact trade during the month of September. Although import prices were up, they were up less than expected. Again, with the weak dollar you would've thought you would have seen more inflation on import prices, more pricing pressure to the upside on imported goods. But still, it's directionally as you would've expected, just not as much as you would have thought. Markets really haven't reacted to the data. It's not considered a major economic release. But it's a bit surprising and against the grain of what we would have expected."

CRAIG PECKHAM, EQUITY TRADING STRATEGIST, JEFFERIES & COMPANY,

NEW YORK:

"This is consistent with an economy that is seeing an increase in domestic demand for foreign goods. It is surprising that this is happening in the context of a weakening dollar, which softens the purchasing power of U.S. buyers. The overall upturn in U.S. demand is trumping the fall of the dollar."

SUBODH KUMAR, CHIEF INVESTMENT STRATEGIST, SUBODH KUMAR &

ASSOCIATES, TORONTO:

"I think that the deficit is going to bring some caution to the market because what the U.S. would've liked to have seen was exports going up and the deficit declining. From the equity point of view, we were hoping that international earnings would help multinational companies. This number adds to a sense of the markets being in a range and a corrective phase."

MARKET REACTION: STOCKS: U.S. stock index futures hold gains BONDS: U.S. Treasury debt prices steady at lower levels DOLLAR: U.S. dollar extends losses versus yen