The U.S. goods trade deficit for industrial products increased in May as the value of industrial supplies, capital goods and autos imported continued to outpace exports of such goods. This is in line with the overall U.S. goods trade deficit, which increased to $88.1 billion from $85.7 billion in April.
The industrial goods trade deficit increased to $36.7 billion in May from $34.39 billion in April, far exceeding pre-pandemic levels of trade deficits, according to Commerce Department data released on Thursday.
These rising numbers, rather than being a sign of anemic domestic production, are instead a signal of improving domestic demand that is outpacing that of the rest of the world. As manufacturing activity expands to meet the economic recovery, the demand for industrial imports is also rising to meet the raw material, components and equipment needs of manufacturing companies.
Source: Commerce Department
Particularly hard hit in exports was the auto sector, which had the highest percentage decline on the month. The semiconductor shortage is a big reason, as auto companies extend production cuts in North America. At the same time, imports of industrial supplies also climbed 4.5% compared to April, which added to the deficit.
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