By Geoffrey Smith
biedexmarkets.com — The U.S. deficit widened for the second straight month in October, as oil prices started to rise again, pushing the country’s import bill higher, while the strong dollar restrained exports.
rose for the first time in four months to $334.80 billion, while fell slightly to $256.60B as the peaked at a 20-year high, leaving a deficit of $72.2B.
While imports are still some 5% below their peak earlier in the year, they are still running at more than 20% above the rates seen prior to the pandemic, despite a wealth of evidence to suggest that consumers have largely switched back to pre-pandemic spending patterns that are more skewed toward services. As such, they paint a picture of broad strength in U.S. demand as the country heads into the holiday season.
However, the Bureau of Economic Analysis’ breakdown of the figures showed that retailers are still throttling back on some goods, especially consumer goods, having over-ordered earlier in the year and being stuck with inventory that they couldn’t sell.
The BEA said imports of consumer goods fell $600M from September, but imports of cell phones fell $2.0B and imports of toys fell $1.0B after a pre-holiday spike in orders.
The decline in cell phone shipments may continue into November, judging by news out of Apple’s (NASDAQ:) contract manufacturer Foxconn (TW:) on Monday. The Taiwanese company, also known as Hon Hai Precision, reported that its sales in November fell 29% from October as a second wave of protests against working conditions at its giant plant in Zhengzhou hit production.
The BEA said the October deficit with China fell by $6.0B as imports fell some 10% to $39.7B.
By contrast, the deficit with the European Union widened amid a rebound in exports from Europe, as the problems that have snarled its factories’ supply chains in recent months eased.