The numbers: The U.S. trade deficit sank almost 18% in October after the biggest surge in exports in 13 years and a slowdown in imports partly tied to congestion at domestic ports.
The trade gap shrank to $67.1 billion from a record $81.4 billion in the prior month, the government said Tuesday. Economists polled by The Wall Street Journal had forecast a $67 billion deficit.
U.S. exports climbed 8.1% to an all-time high of $223.6 billion. It’s the biggest monthly increase since 2008.
Imports edged up less than 1% to $290.7 billion, but that’s still a record high.
Although imports and exports are now both higher than before the pandemic, global trade is still being disrupted by new strains of the coronavirus. The resulting supply chain problems are likely to persist for a while.
Big picture: The steep drop in the October trade gap from a record U.S. high just one-month earlier is likely a one-off.
The surge in exports won’t be sustained and persistent delays at U.S. ports in unloading waiting ships have curbed imports and contributed to the biggest spike in inflation in 31 years. Th port congestion will eventually clear up.
Throughout the pandemic, the U.S. has been running unusually high trade deficits. Americans have been buying lots of foreign-made goods amid a strong economic revival, but other countries have been slower to recover and that’s reduced their appetite for American-made goods.
Key details: Shipments of industrial supplies, including U.S.-produced oil, accounted for about half of the increase in exports. The U.S. also exported more aircraft, soybeans and autos, among other things.
Imports of autos and cell phones rose ahead of the holiday season when they are in strong demand.
Those increases were largely offset by declines in chemicals, computer chips and aircraft.
The trade gap in goods with China, meanwhile, fell by $3.2 billion in October to a seasonally adjusted $28.3 billion, but through the first 10 months of 2021 the deficit with China is running well ahead of last year’s pace.
What they are saying? “Trade flows have recovered pandemic losses with both exports and imports now higher than pre-crisis levels,” said chief economist Rubeela Farooq of High Frequency Economics.
“But new virus outbreaks and resulting restrictions could be a headwind if they weigh on global demand and further aggravate supply chains and shortages.”