U.S. Trade Deficit Widens to New Record August As Imports Rebound

view original post

By Yuka Hayashi

The U.S. trade deficit widened to a fresh record in August as American consumers continued to show a strong appetite for imported goods such as pharmaceutical products and toys, though supply-chain disruptions continued to constrain global trade.

The Commerce Department on Tuesday said the trade gap in goods and services expanded to $73.3 billion in August from $70.3 billion in July as the increase in imports outpaced the growth in exports. The August deficit was slightly larger than the prior record of $73.2 billion in June.

Imports rose 1.4% in August to $287 billion, also a record high, reflecting higher shipments of consumer goods, as well as industrial supplies by business customers.

As many economies around the world continued to emerge from pandemic-related restrictions, exports also rose to $213.7 billion, up 0.5% from July.

Economists polled by The Wall Street Journal had forecast a trade deficit of $70.7 billion for August.

Though shipments into and out of the U.S. grew overall in August, issues with global-supply chains continued. As a severe shortage of semiconductors forced auto makers to reduce their production, exports of vehicles and parts fell 8%, while imports also shrank 5.2%.

Citing the chip shortage and historically low inventories, General Motors Co. said last week its auto sales in the U.S. fell roughly 33% in the third-quarter.

Transportation-industry representatives say congestion at ports and labor shortages continue to create bottlenecks in cross-border trade.

“We are witnessing unprecedented disruptions and global delays and shortages on essential goods including electronics, food, fuel and medical supplies,” the International Chamber of Shipping and other transportation industry groups wrote in a joint letter to the United Nations General Assembly last week. “Consumer demand is rising and the delays look set to worsen ahead of Christmas and continue into 2022.”

After a brief pullback earlier in the summer, imports into the U.S. rebounded in August in line with stronger consumer demand. Personal spending on goods and services rose 0.8% in August following a 0.1% decline in July, the Commerce Department reported Friday. The increase came as personal income edged upward by 0.2% in August, reflecting wage gains and the federal government’s distribution of child tax credits.

Write to Yuka Hayashi at yuka.hayashi@wsj.com

 

(END) Dow Jones Newswires

October 05, 2021 09:15 ET (13:15 GMT)

Copyright (c) 2021 Dow Jones & Company, Inc.