The US trade situation worsened in September as the country bought more goods and services from abroad than it sold, the Commerce Department announced on Tuesday.
The trade shortfall of the world's largest economy increased to $61.5 billion, a rise of 4.8 percent from the revised $58.7 billion in August, and higher than the market forecast of $60.5 billion. Imports climbed by 2.7 percent to $322.7 billion, surpassing the 2.2 percent increase of exports to $261.1 billion.
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| In September, data from the Commerce Department revealed a modest expansion in the United States' trade deficit. Photo: Justin Sullivan. Source: legit.ng |
The US trade activity has been bolstered by robust consumer spending, fueled by pandemic savings, but rising interest rates, aimed at taming inflation, could undermine demand.
However, exports could also face challenges as the global economy slows down due to monetary policy tightening and the spread of the Delta variant of Covid-19. The September jump in imports was driven by consumer goods such as cell phones and household items, as well as cars and car parts.
"We expect both exports and imports to moderate in the coming months, but imports will likely suffer more as consumer spending cools and businesses reduce their inventory levels," said Matthew Martin, an economist at Oxford Economics. "On the other hand, a weakening global outlook and the strength of the US dollar will hurt export growth," he added. The Commerce Department said that the September trade deficit resulted from a larger gap in goods trade, and a smaller surplus in services trade.
The US goods deficit with China, a point of contention during the trade war between both countries, rose to $24.1 billion in September, data showed. Trade had "a small negative impact on GDP" in the third quarter, observed Rubeela Farooqi of High Frequency Economics. She added that based on preliminary estimates, she expects "a small positive effect from net exports" in the fourth quarter.