Despite a rise in economic activity, the U.S. trade deficit in goods rose in June, according to a Reuters article.
While the U.S. economy has rebounded from the COVID-19 pandemic's effects more quickly than many other countries, the goods trade deficit still facing the U.S. on imports increased 3.5% to $91.2 billion in June, according to the U.S. Commerce Department, as reported by Reuters.
"The widening in the advance nominal goods deficit in June is further evidence that net exports will be a drag on second-quarter GDP," Ryan Sweet, a senior economist at Moody's Analytics, was quoted as saying by Reuters.
Imported goods alone advanced 1.5% to $236.7 billion, and the increases were found to be in imports of food, capital goods and industrial supplies, Reuters reported.
"We expect the overall trade deficit to narrow in the coming months as consumers rotate their spending toward services and greater vaccine diffusion abroad encourages stronger export growth," Mahir Rasheed, a U.S. economist at Oxford Economics in New York, said, as reported by Reuters. "However, risks from sticky supply-chain disruptions and the rapid spread of the delta variant could slow trade flows."
According to Reuters, imports for foreign car imports and consumer goods fell, which could foreshadow what the future of consumer spending could emulate and allow the gap in imported goods to decrease. Reuters also reported that goods exports rose .3% to $145.5 billion despite a sharp decline in food shipment and a continued decrease in the GDP growth over the last three quarters.
The commerce department also reported that wholesale inventories increased 0.8% in June after rising 1.3% in May, which shows some products to be on the rise. Stocks at retailers gained 0.3% in June after dropping 0.8% in May, while motor vehicle inventories slipped only 0.3% after a 5.5% decline in May, Reuters reported.
"Overall, it looks like real inventories fell sharply in the second quarter on net, but the weakness was most severe early in the quarter," Daniel Silver, an economist at JPMorgan in New York, said, as reported by Reuters.