U.S. Goods-Trade Gap Narrows To Least Since October As Imports Drop Again
The U.S. merchandise-trade deficit narrowed in July to the smallest since October as imports fell for a fourth month.
(Bloomberg) -- The US merchandise-trade deficit narrowed in July to the smallest since October as imports fell for a fourth month, suggesting a tailwind for economic growth in the third quarter.
The shortfall shrank 9.7% to $89.1 billion last month, Commerce Department data showed Friday. The figures, which aren’t adjusted for inflation, compared with a median estimate for a gap of $98.5 billion in a Bloomberg survey of economists.
Exports were little changed at $180.97 billion, while imports declined 3.5% to $270 billion.
Inbound shipments of consumer goods dropped fell the most since at least 1992, declining 10% to $67.5 billion. That was the lowest since November.
US retailers and manufacturers this year stepped up efforts to replenish stockpiles amid the uncertainties in logistics networks to ensure they’re able to meet robust demand despite the hottest inflation in four decades.
But Walmart Inc., Target Corp. and others are seeing consumer preferences shift to basic goods including food and home essentials, and shoppers are putting the brakes on purchases of furniture and electronics compared with a year ago.
While imports of consumer goods have fallen from a record earlier this year, they remain well higher than the pre-pandemic average.
Retail inventories increased 1.1% in July to a record $730.7 billion from a month earlier as companies stock up on merchandise amid still-uncertain supply chains. Stockpiles at wholesalers climbed 0.8% to $902.9 billion.
Incoming container cargo to the Port of Los Angeles -- the largest in the US -- rose to the most on record for the month of July, indicating that retailers and manufacturers were still replenishing inventories heading into the second half of the year.
The National Retail Federation, which represents about 18,000 US retailers, projects that shipments will retreat in the second half of 2022, following record-setting volumes earlier this year. Still, the Washington-based trade group sees a 2% increase in imports for the full year, driven by strong consumer demand amid historic-low unemployment rates and inflated wages and savings in the first half of the year.
The narrowing of the trade deficit could make a positive contribution to third-quarter economic performance. In the first quarter, the widening of the gap largely explained the biggest shrinkage in gross domestic product since the pandemic recovery began.
The value of exports fell slightly due to a drop in outbound shipments of industrial supplies such as petroleum products, as well as foods and consumer goods.
More complete July trade figures that include the balance on services will be released on Sept. 7.
(Updates with consumer-goods imports data in fourth paragraph.)
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