A rise in imports led to a higher U.S. trade deficit in goods in August, pointing to the impact of the delta variant on exports, while automobiles took center stage in dragging down both exports and imports.
The U.S. advanced goods trade deficit inched up by $0.8 billion to $87.6 billion in August, or a 0.9% increase compared to July, according to data released by the U.S. Census Bureau on Tuesday.
U.S. imports of goods rose by 0.8% to $236.64 billion, while U.S. exports of goods rose by only 0.7% to $149.04 billion on the month.
The increases in goods imports and exports were led by consumer goods and industrial supplies, while all other categories, including automobiles, declined in August. Exports and imports of autos led the way, declining by 8.7% and 5.3%, respectively.
Also in the report, advanced data on wholesale inventories posted a strong gain of 1.2% on the month, following a 0.6% increase in July, while retail inventories ticked up by 0.1% in August.
Both wholesale durable and nondurable goods inventories rose by 1.2% and 1.3%, respectively.
Retail inventory, on the other hand, saw a 1.5% decline in motor vehicles and parts, which offset the inventory gains from other retail categories at 0.6%. The data released Tuesday was an initial estimate and will be subject to revision once the official data is released.
The takeaway
With a somewhat disappointing report on international trade in goods, we expect that the overall trade deficit—which will be released next week and includes service trade—will widen in August, putting more downside pressure on gross domestic product in the third quarter.
At the same time, automobiles will most likely continue to be a problem for the trade balance and inventories because of growing shortages in the global supply chain.
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