US trade deficit hits record in June as imports balloon

[WASHINGTON] A surge in imports of industrial supplies drove the US trade deficit to a record in June, according to government data released on Thursday, a sign that global supply chains may be coming back online after the pandemic disruptions.

The trade gap widened by US$4.6 billion to US$75.7 billion, a nearly 7 per cent increase compared to May, the Commerce Department reported. That was higher than analysts had expected, and beat the previous all-time high set that month.

Imports of goods and services jumped US$6 billion, most of which was accounted for by the rise in industrial materials and supplies such as iron, steel and chemicals, as well as a US$1.2 billion increase in non-monetary gold.

US purchases of imported consumer goods, including cars, fell in the month, according to the report.

Exports also rose but gained just US$1.2 billion compared to May.

As the world's largest economy has reopened and recovered faster than other regions, American businesses have reported struggles getting a steady supply of input.

"Supply chain disruptions are a risk but trade flows should rebalance as global economies come back online more completely," said Rubeela Farooqi of High Frequency Economics.

The lifting of pandemic restrictions allowed travel and tourism - categorised as a service export - to increase US$400 million in the month, according to the data.

The US trade deficit with China in goods alone narrowed slightly to US$27 billion, while gaps with the European Union, India and Japan all increased by around US$1 billion.

AFP