The U.S. trade deficit widened significantly in the month of November, according to a report released by the Commerce Department on Thursday.
The report said the trade deficit widened to $80.2 billion in November from a revised $67.2 billion in October. Economists had expected the deficit to widen to $77.1 billion from the $67.1 billion originally reported for the previous month.
“The sharp rebound in the trade deficit in November means that net trade is now on track to be a small drag on fourth quarter GDP growth, rather than a small boost as we had previously assumed,” said Michael Pearce, Senior U.S. Economist at Capital Economics.
He added, “Partly as a result, we now expect GDP growth was a slightly less impressive 4.5% annualized in the fourth quarter, down from our previous estimate of 6.5%.”
The wider than expected trade deficit came as the value of imports spiked by 4.6 percent to $304.4 billion in November after jumping by 1 percent to $291.0 billion in October.
Imports of industrial supplies and materials, such as crude oil, showed a substantial increase along with imports of consumer goods.
Meanwhile, the report showed the value of exports crept up by 0.2 percent to $244.2 billion in November after soaring by 8.3 percent to $223.9 billion in October.
A sharp increase in exports of services helped offset decreases in exports of capital goods and industrial supplies and materials.
The Commerce Department noted the goods deficit widened to $99.0 billion in November from $83.6 billion in October, while the services surplus increased to $18.8 billion from $16.7 billion.
“Looking ahead, we expect the trade deficit to remain historically elevated until pandemic worries ease,” said Kathy Bostjancic, Chief U.S. Financial Economist at Oxford Economics. “The Omicron variant is a key downside risk that threatens to distort trade flows by slowing the global recovery in early 2022.”
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