U.S. trade deficit widens sharply in November as imports surge

The US trade deficit widened to -USD80.2b in Nov-21 (Oct-21: -USD67.2b), beating the market consensus of -USD77.1b. The stronger-than-expected deficit was attributed to a steady +4.6%mom rise in monthly imports while exports grew at a slower pace of +0.2%mom.

On an annual basis, exports moderated slightly by +21.1%yoy (Oct-21: +22.5%yoy), with the overall exports recording a new high of USD224.2b. The sustained exports growth was bolstered by the high demand for crude oil, pharmaceutical preparations, and cell phones during the month.

The outbound shipments were driven by exports to Canada (+23.2%yoy), Mexico (+25.1%yoy), EU (+21%yoy), and to Asian countries (+22.8%yoy), especially Japan (+33.6%yoy) and China (+13%yoy). Similar to exports, total imports value hit an all-time high of USD304.4b in Nov-21.

The +20.6%yoy rise in imports (Oct-21: +18.1%yoy) was buoyed by the robust consumer spending for the holiday season coupled with the improvements in the supply constraints amid easing of the port traffics.

By country, US imports in Nov-21 were mainly sourced from Asian countries (+15%yoy) especially ASEAN (+21.7%yoy) and China (+7.9%); North America i.e. Canada (+40.1%yoy) and Mexico (+15.9%yoy); and EU (+20.9%yoy). Given the recent resurgence in the domestic Covid-19 cases, we opine this could weigh down on the outlook of US imports and household spending going forward.

Moreover, the fears of many countries reinstating stringent restrictions to curb the spread of the new Omicron variant could affect the near-term outlook for exports and trade-oriented industries. – MIDF Research