US Goods-Trade Deficit Widens for the First Time Since March

The US merchandise-trade deficit widened in September for the first time in six months as imports grew and some exports plunged.

The shortfall widened 5.7% to $92.2 billion last month, Commerce Department data showed Wednesday. The figures, which aren’t adjusted for inflation, compared with a median estimate for a gap of $87.5 billion in a Bloomberg survey of economists.

Exports declined 1.5% to $177.6 billion. Imports rose to $269.8 billion, also the first increase since March.

Inbound shipments of consumer goods rose 1.4% to $69 billion. While imports of consumer merchandise have fallen from a record earlier this year, they remain well higher than the pre-pandemic average.

A 3.1% drop in the value of exports of industrial supplies led the overall decline. Outbound shipments of foods, feeds and beverages plummeted 14%, but account for less volume. Meantime, exports of autos jumped 5%, reversing much of the prior month’s decrease.

The Federal Reserve’s most aggressive monetary tightening since the early 1980s has sent the US dollar surging, with the currency strengthening for a fourth straight month in September. While that lowers the cost of imports, it also weakens demand in international markets for US-produced goods.

That’s showing up in earnings of domestic companies. Microsoft Corp. posted its weakest quarterly revenue growth in five years, partly because of foreign-exchange rates. Tesla Inc. blamed weaker-than-expected third-quarter sales in part on the dollar, along with production and delivery bottlenecks.

However, as the Fed charges on with its aggressive rate-hike campaign, recession concerns are mounting and upping bets that the central bank will have to slow its pace of increases or reverse course. A gauge of the dollar’s strength fell to a three-week low Wednesday, and a sustained weakening could be a boon to US exporters.

Supply Chain Improving

US ports had for months been overwhelmed by an influx of goods that triggered supply-chain logjams and delivery delays, but that is showing signs of abating due to logistics improvements and as interest-rate increases start to weigh on demand.

The data precede the government’s first estimate of third-quarter gross domestic product on Thursday, which is forecast to show positive growth for the first time this year, due in part to fewer imports.

Retail inventories increased 0.4% in September to a record $744 billion from a month earlier as companies stock up on merchandise amid still-uncertain supply chains. That also likely portends discounts ahead for the holiday shopping season.

Stockpiles at wholesalers climbed 0.8% to $921.7 billion.