Imports climbed more than exports to yield the largest monthly trade gap in more than a decade.
By guest author Harriet Torry from Wall Street Journal
The U.S. trade deficit widened in July, as imports increased more than exports due to a rebound in domestic demand after coronavirus-related shutdowns.
The foreign-trade gap in goods and services expanded 19% from the prior month to a seasonally adjusted USD63.56 billion in July, the Commerce Department said Thursday.
That was the largest monthly trade deficit since July 2008, during the 2007-2009 recession. Economists surveyed by The Wall Street Journal had expected a trade deficit of USD58.6 billion.
The growth of the deficit reflected a pickup in Americans’ demand for foreign-made imports as states eased restrictions on business activities across the country. Imports increased 11% in July to USD231.7 billion.
Exports, meanwhile, rose 8.1 % to USD168.1 billion from June’s USD155.5 billion. Exports of vehicles, consumer goods, industrial supplies and capital goods all rose.
U.S. manufacturers benefited from pent-up demand in July. U.S. factory orders rose a seasonally adjusted 6.4 % in July for the second month in a row, while orders for durable goods increased 11.2 % from the previous month as manufacturers boosted output and the economy continued its climb back from disruptions related to the coronavirus pandemic.
Companies ran down inventories in the run-up to summer, and certain sectors are now building stockpiles in anticipation of demand returning, said Lewis Black, chief executive of tungsten metal producer Almonty Industries. Still, some hesitation remains, and slashed shipping schedules have delayed delivery times.
“I think there’s a desire to get back to normal but a reluctance to really embrace it just in case you’re wrong,” he said, noting that mines and plants still have social-distancing and face-mask protocols in place.
Other signs suggest manufacturers’ output grew in August, both in the U.S. and overseas, as demand picked up after several months of pandemic-related lockdowns.
A survey of purchasing managers in manufacturing released Tuesday, September 2, 2020, by the Institute for Supply Management found that U.S. factory output grew in August at the fastest pace since November 2018, driven by a surge of new demand and faster export orders. Germany and China also recorded stronger recoveries, according to IHS Markit.