The U.S. economy is expanding at a 2.9 percent annualized rate in the fourth quarter, following the latest data on trade balance and domestic payrolls, the Atlanta Federal Reserve’s GDPNow forecast model showed on Friday.

This was slower than the 3.0 percent pace for fourth-quarter gross domestic product that Atlanta Fed’s GDP program calculated on Thursday.

The Atlanta Fed announcement came just hours after the U.S. trade deficit rose to a seven-month high in September as imports surged to a record high amid strong domestic demand, offsetting a rebound in exports.

The Commerce Department said on Friday the trade gap increased 1.3 percent to $54.0 billion, widening for a fourth straight month. Data for August was revised to show the trade deficit rising to $53.3 billion instead of the previously reported $53.2 billion.

The trade deficit continues to deteriorate despite the Trump administration’s protectionist trade policy, which has left the United States locked in a bitter trade war with China as well as tit-for-tat tariffs with other trade partners, including the European Union, Canada and Mexico.

The politically sensitive goods trade deficit with China jumped 4.3 percent to a record high of $40.2 billion in September. Economists polled by Reuters had forecast the overall trade deficit rising to $53.6 billion in September.

When adjusted for inflation, the goods trade gap increased to an all-time high of $87.0 billion in September from $86.3 billion in August.

The government reported last week that the trade deficit subtracted 1.78 percentage points from gross domestic product in the third quarter. That was the most since the second quarter of 1985 and reversed the 1.22 percentage points contribution in the April-June period.

Earlier, the government said U.S. job growth rebounded sharply in October and wages recorded their largest annual gain in 9-1/2 years, pointing to further labor market tightening that could encourage the Federal Reserve to raise interest rates again in December.

The Labor Department’s closely watched monthly employment report on Friday also showed the unemployment rate was steady at a 49-year low of 3.7 percent as 711,000 people entered the labor force, in a sign of confidence in the jobs market.

Sustained labor market strength eased fears about the economy’s health following weak housing and business spending data. President Donald Trump cheered the robust jobs report, which came less than a week before the midterm elections that will decide who controls the U.S. Congress.

Nonfarm payrolls increased by 250,000 jobs last month as employment in the leisure and hospitality sector bounced back after being held down by Hurricane Florence, which drenched North and South Carolina in mid-September.

Average hourly earnings rose five cents, or 0.2 percent, in October after advancing 0.3 percent in September. That boosted the annual increase in wages to 3.1 percent, the biggest gain since April 2009, from 2.8 percent in September.

An increase in the nowcast of fourth-quarter real nonresidential equipment investment growth from 10.9 percent to 11.8 percent after the data releases was more than offset by a decrease in the nowcast of real government spending growth from 2.4 percent to 2.2 percent and a decrease in the nowcast of the contribution of inventory investment to fourth-quarter real GDP growth from -0.01 percentage points to -0.05 percentage points.

The next GDPNow update is Friday, November 9.