The goods trade deficit set another record low in September at $96.3 billion as American demand remained strong, according to the Census Bureau advance report released Wednesday.
The imbalance between the recovery rates in the United States and in other countries remained a heavy drag on the trade of goods, according to the data in the report.
Domestic demand for imported goods continued to be strong, rising by 0.5% on the month and by 18% compared to a year ago.
At the same time, exports posted a sharp decline of 4.7% in September, led by decreases in industrial supplies, capital goods and automobiles, which were down by 9.9%, 3.6% and 2%, respectively.
The economic slowdown in China, the third most popular exporting destination for U.S. goods, was a likely factor that contributed to the drop in goods exports.
With the service trade surplus remaining sluggish in recent months, we expect that next week’s final reading for the trade deficit—which includes both the goods and service trades—will also widen to a record low.
Such a deficit will imply more downside risk to gross domestic product growth in the third quarter because the trade balance accounted for about 6.4% of the total real GDP in the second quarter.
Also in the report, wholesale inventories showed a 1.1% gain on the month, while retail inventory decreased by 0.2%.
Motor vehicles and parts continued to drive the decline in retail inventories, posting a sharp 2.4% decline in September as the chip shortage persists. But retail inventories excluding autos rose by 0.6% on the month, and by 9.9% compared to a year ago.