US trade deficit hits highest on record
A surge in imports of goods and services in March drove the US trade gap to the highest level ever recorded, with huge increases in purchases of autos, computers, furniture and clothing, the government reported on Wednesday. The trade deficit jumped more than 22 percent to US$109.8 billion, as the double-digit increase in imports to an all-time high of US$351.5 billion outstripped the more modest gain in exports, the Commerce Department said. But US exports also hit a record of US$241.7 billion, the data showed. As the world's largest economy showed a robust recovery from the pandemic disruptions in recent months, businesses have been hampered by global supply chain snarls and shortages that meant relatively modest import gains. But the data showed a shift in March with a US$3.2 billion increase in imports of autos, parts and engines – including a US$2.5 billion jump in passenger cars alone – a US$1.5 billion rise in computers, and US$1.3 billion gain for computer accessories. Purchases of furniture and household goods jumped US$1.3 billion, while toys, games and sporting goods rose by a similar amount, the report said. A strong American consumer is likely to support continued demand for imports, while slower recoveries among US trading partners could hold down export growth, economists say. "The prevailing domestic and overseas economic environment could keep the deficit pinned near record levels and impose a significant headwind to US GDP growth," said Mahir Rasheed of Oxford Economics. The Federal Reserve is raising interest rates as it grapples with accelerating inflation, which could tamp down demand. In the first three months of the year, the goods and services deficit increased US$84.8 billion, or 41.5 percent, from the same period in 2021, the report said. "However, we expect aggressive policy tightening (and) somewhat softer domestic demand growth to cool import growth and allow the deficit to stabilise," Rasheed said. Even with the ongoing Covid-19 lockdowns in China, which raised fears of increasing difficulties sourcing products, the trade gap with the world's number two economy jumped US$7.4 billion to US$48.6 billion, the report said. (AFP)