US trade deficit widens as imports surge to a record

[WASHINGTON] The US trade deficit widened in November, reflecting a surge in the value of imports as domestic retailers made a final push to stock shelves for holiday shoppers and demand for foreign oil increased.

The gap in trade of goods and services expanded to US$80.2 billion, from a revised US$67.2 billion in October, according to Commerce Department data released on Thursday (Jan 6). The median estimate in a Bloomberg survey of economists was for an US$81 billion shortfall. The figures are not adjusted for prices. The value of imports increased to US$304.4 billion, while exports grew to US$224.2 billion, also a record.

While supply chains remain challenging, a stronger US dollar has cushioned US importers even as a surge in global inflation drives up costs. An inflation-adjusted index of the US dollar against the currencies of some its major trading partners strengthened in 2021 by the most in 6 years, easing the cost of imports. Even so, lean inventories relative to sales, snarled supply chains and transportation challenges continue to make it difficult for US producers to meet demand.

Meanwhile, the increase in merchandise exports suggests that overseas economies are slowly recovering and demanding more goods from the US. That could see trade being less of a drag on US economic growth in the coming months, after it subtracted 1.26 percentage points from gross domestic product in the third quarter.

The merchandise-trade deficit, which strips out services, widened to record US$99 billion. The nation's surplus in services trade increased to US$18.8 billion, the highest in 5 months. The 12.7 per cent advance from a month earlier was the largest since September 2004. Travel exports - or spending by visitors to the US - jumped 36.4 per cent to US$8.1 billion, the most since March 2020, after the Biden administration lifted travel restrictions on Nov 8. Travel imports, a measure of Americans travelling abroad, climbed to a pandemic high of almost US$7 billion. On an inflation-adjusted basis, the November merchandise-trade deficit widened to US$110.8 billion from US$97.1 billion a month earlier.

BLOOMBERG