FILE PHOTO: Stacked containers are shown as ships unload their cargo at the Port of Los Angeles in Los Angeles, California, U.S. November 22, 2021. REUTERS/Mike Blake
February 28, 2022
WASHINGTON (Reuters) – The U.S. trade deficit in goods widened sharply to a record high in January amid an increase in imports as businesses continued to replenish depleted inventories.
The pace of inventory accumulation is, however, slowing after accelerating in the fourth quarter. That, together with the surge in the goods trade deficit, could weigh on economic growth this quarter.
The goods trade deficit jumped 7.1% to an all-time high of $107.6 billion last month, the Commerce Department said on Monday. Imports of goods increased 1.7%, led by food and motor vehicles. There were also large increases in imports of industrial supplies, capital and consumer goods. Imports of other goods, however, tumbled.
Exports tumbled 1.8%, weighed down by consumer goods, motor vehicles, food and other goods. But exports of capital goods and industrial supplies increased.
Trade has been a drag on gross domestic product for six straight quarters. The increase in imports last month largely reflected the rebuilding of inventories.
Stocks at wholesalers increased 0.8%. Retail inventories rose 1.9%, boosted by a 2.4% increase in motor vehicle stocks.
Excluding motor vehicles, retail inventories gained 1.7% after advancing 3.9% in December. This component goes into the calculation of GDP growth.
Inventory investment increased at a seasonally adjusted annualized rate of $171.2 billion in the fourth quarter. Most economists see further scope for inventories to rise, noting that inflation-adjusted inventories remain below their pre-pandemic level. Inventory-to-sales ratios are also low.
Inventories contributed 4.90 percentage points to the fourth quarter’s 7.0% annualized growth pace. Restocking, after three straight quarters during which inventories were drawn down, is supporting manufacturing.
Growth estimates for the first quarter range from as low as a 0.6% rate to as high as a 5.4% pace.
(Reporting by Lucia Mutikani; Editing by John Stonestreet and Andrea Ricci)
Source: One America News Network
