Aug 28, 2020
U.S. goods-trade gap swells to second-biggest on record
, Bloomberg News
The U.S.’s deficit in merchandise trade swelled to the second-largest on record last month as imports climbed to pre-pandemic levels, buoyed by demand for automotives.
The overall deficit grew to US$79.3 billion in July from a revised US$71 billion in June, according to Commerce Department data released Friday. The median projection in a Bloomberg survey of economists called for a US$72 billion shortfall in July, and the reading was bigger than all except one of 37 estimates. The biggest gap was recorded in December 2018, at US$79.5 billion.
Exports increased 11.8 per cent from June to US$115 billion, the highest since March. Imports rose by the same measure to US$194.3 billion, it said. That was the most since February.
The monthly gain in exports was led by a 44 per cent surge in automotive-vehicle shipments. Industrial supplies, such as oil, rose 7.1 per cent and capital goods, which include factory machinery and parts, jumped 7.5 per cent. Foods, beverages, and animal feed were up 2.1 per cent from June. Overall, exports are 15.9 per cent are lower than a year earlier.
“Global and U.S. demand continue to face a long and risky path towards recovery, so we see trade struggling to continue to regain ground quickly,” James Watson and Gregory Daco, economists at Oxford Economics, wrote in a note.
Two-Way Trade
While the total value of U.S. two-way trade picked up to US$309.3 billion from US$276.7 billion in June, the number is still well below pre-pandemic levels as the world struggles to recover from the coronavirus crisis. That said, American exporters may be benefiting from a decline in the value of the dollar, which makes U.S. goods more competitive in overseas markets.
On the imports side, industrial supplies gained 10.7 per cent from a month earlier. Capital goods, cars, and consumer merchandise all increased. Imports are still 7.6 per cent lower than July 2019.
The report also showed that wholesale stockpiles fell 0.1 per cent during the month, while retail inventories gained 1.2 per cent. Both provide an indication of what companies expect consumer and business demand for products will be in months to come.