Thanks to a rebound in exports, the goods and services deficit rose to $ 67.1 billion, a decrease of 17.6% from the previous month.
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The United States’ trade deficit narrowed sharply in October thanks to an exceptional rebound in exports and after a record deficit in September. But the Omicron variant could disrupt the world’s largest economy’s trade flows with the rest of the world.
The US goods and services deficit stood at $ 67.1 billion, down 17.6% from the previous month.
Imports rose 0.9% to $ 290.7 billion while exports, which had declined in September, rebounded 8.1% to $ 223.6 billion.
Analysts expected a lower deficit (66.8 billion). However, it is “the strongest contraction of the deficit over one month since November 2008”, responded Mahir Rusheed, economist at Oxford Economics in a note.
And, we have to go back to April to have a lower deficit.
Cumulated over the first ten months of the year, the deficit is nevertheless widening by 29.7% compared to the same period of 2020. The past year was marked by a historic recession caused by the COVID-19 pandemic which had crippled trade flows around the world.
In October alone, the world’s largest economy exported more industrial products ranging from capital goods and consumer goods to cars, automotive equipment and crude oil. The agricultural sector also benefited greatly from the rebound in exports with a sharp increase in demand for soybeans and corn.
On the import side, the United States was less fond of industrial materials and semiconductors in particular. In September, companies had heavily imported these goods to replenish their stocks as the holiday season approached.
“Overall, trade flows have recovered from the losses associated with the pandemic, with exports and imports now above pre-crisis levels,” said Rubeela Farooqi, chief economist at HFE.
However, it highlights the uncertainty associated with the appearance of a new variant of COVID-19.
New restrictions
New virus outbreaks and the resulting restrictions could be a headwind if they weigh on global demand and further exacerbate supply chains and shortages.
Almost two weeks after the announcement by South Africa of the discovery of this new variant, cases have been reported in some forty countries including in recent days, for Latin America, cases imported to Brazil, Mexico or Chile.
New health restrictions have been taken.
Outbreaks of infections could lead factories to close, reducing production and penalizing international trade, which in late summer and early autumn encountered serious disruptions in logistics chains linked to the recovery demand.
For now, Oxford Economics expects “stronger (US) export growth and moderation in import volumes”, which would keep the deficit stable next year after reaching several records in 2021.
“However, the Omicron variant is a key downside risk that threatens to distort trade flows by slowing the global recovery in early 2022,” emphasizes Mahir Rusheed.
The record trade deficit recorded in September was revised up to 81.4 billion against 80.9 billion initially announced.
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