Solid domestic demand in the US has caused import growth to outpace exports for the better part of the past year, explained analysts at Wells Fargo. They point out that with consumption slowly rebalancing back toward services spending, imports should eventually slow and provide some relief at US largest ports.
Key Quotes:
“Exports plunged 3.0% in September, which more than offset the 0.6% gain in import growth and caused the U.S. trade deficit to widen to a record deficit of $80.9 billion. Weakness in exports was broad based with every major category of goods having moved lower during the month, with the exception of consumer goods where a $1.5 billion gain in pharmaceutical preparations prevented a decline in the overall category. Industrial supplies exports plunged 10.5%, in real terms, which was the largest monthly decline since 2008.”
“Consumption has started to slowly rebalance back toward services spending, which should weigh on imports and provide some relief at our nation's largest ports where a previously unimaginable number of container ships await port space to offload their goods. All of this said, we're likely some time away from a meaningful reprieve and things may get worse before they get better.”
“Further, the need to replenish record-low retail inventories will likely keep goods flowing into the country at an accelerated rate for some time. But the continued slowing in domestic spending and gradual gain in the pace of global growth should eventually lead trade to modestly boost growth as the trade deficit gradually narrows.”