The U.S. merchandise trade deficit widened in January as imports hit a record, signaling a continued recovery in U.S. consumer demand.
The deficit grew to $83.7 billion from $83.2 billion in December, according to Commerce Department data.
Economists in a Bloomberg survey had forecast a deficit of $83 billion in January. Imports rose 1.1% to $218.9 billion, while exports rose 1.4% to $135.2 billion, the highest since February 2020.
Imports of consumer goods rose to a record $62.8 billion, while inflows of food and beverages also reached a new high of $13.8 billion.
The increases were offset by a plunge in motor vehicle imports, which fell 4.7%, the most since May, to $31.6 billion. Vehicle exports also saw the largest decline in eight months, to $12.6 billion.
The global semiconductor shortage has crippled production at some automakers and prompted President Joe Biden this week to order his administration to address the chip production shortage while he reviews supply chains.
Automakers are cutting back on work hours because of a shortage of semiconductors needed for everything from transmissions to touch screens, and unions are sounding the alarm over the prospect of layoffs.
Overall, the value of U.S. exports plus imports jumped to $354 billion, the highest since October 2018, indicating a recovery in trade.
The data comes as a disrupted flow of containers around the world is flooding America’s largest ports and wreaking havoc on the nation’s strained supply chains.
The bottlenecks are a confluence of surging imports, ailing longshoremen, Covid-19 workplace constraints and trucker and equipment shortages.
China regained the top spot among U.S. goods trading partners in 2020 after falling behind Mexico and Canada in 2019.
The Asian country and the United States waged a trade war under the Trump administration that continues to see tariffs slapped on some $335 billion of Chinese goods annually a year ago.
Washington and Beijing signed the first phase of a trade deal that is supposed to see China buy $200 billion more of U.S. goods over two years. Beijing failed to meet its 2020 trade deal targets as the global pandemic jeopardized transportation and supply chains.
Biden’s trade chief nominee, Katherine Tai, on Thursday called on China to honor its trade pact commitments to the U.S., the strongest signal yet that the new administration plans to build on the deal negotiated by her predecessor rather than scrap it.
Thursday’s report also showed retail inventories retreated 0.6% from the previous month, the first decline since June. Wholesale inventories rose for the second consecutive month, up 1.3%.
The trade picture will be clearer when the final report, which includes services, is released on March 5.
