The US trade deficit in goods increased in August amid a rise in imports as businesses replenished depleted inventories, suggesting trade could again be a drag on economic growth in the third quarter.
The goods trade deficit rose 0.9 per cent to $87.6 billion last month, the Commerce Department said on Tuesday. Businesses are rebuilding inventories to keep up with strong domestic demand as the economy normalizes after severe disruptions caused by the Covid-19 pandemic. Trade has subtracted from gross domestic product growth for four straight quarters.
Imports of goods climbed 0.8 per cent to $236.6 billion. Imports of consumer goods surged 4.6 per cent, while those of industrial supplies rose 3.0 per cent. But imports of food, capital goods and motor vehicles fell. Motor vehicle imports were likely weighed down by a global shortage of semiconductors, which is impacting production.
Demand for goods remains strong even as spending is shifting back to services like travel as more people are vaccinated against the coronavirus.
Rising imports offset a 0.7 per cent rise in goods exports to $149.0 billion. Exports are rising as global economies continue to recover from the pandemic. There were increases in exports of industrial supplies and consumer goods.
But the nation reported a decline in exports of capital goods, motor vehicles and food products.
With imports rising, inventories at wholesalers and retailers increased last month. The Commerce Department reported wholesale inventories accelerated 1.2 per cent last month after gaining 0.6 per cent in July. Stocks at retailers edged up 0.1 per cent after increasing 0.4 per cent in July.
Retail inventories were held back by a 1.5 per cent tumble in stocks of motor vehicle. The drop, which followed a 0.2 per cent gain in July, reflected shortages related to the scarcity of microchips.
Retail inventories excluding autos, which go into the calculation of GDP, rose 0.6 per cent after advancing 0.5 per cent in the prior month. Business inventories were sharply drawn down in the first half of the year.