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Inventory Levels Improve, Trade Deficit Soars

Dec. 29, 2021
Rising imports allow stores and manufacturers to refill depleted stocks, but a drop in exports balloons the deficit.

Manufacturers and retailers in November continued to rebuild inventories depleted by supply chain woes, but they did so primarily through imports, not domestic production, data from the U.S. Census Bureau show.

The trade deficit between the United States and the rest of the world grew 17.5% to nearly $98 billion (seasonally adjusted) in November. Exports were down 2.1% from October in every category except food. Compared to November 2020, exports were up 22%, climbing in every category other than cars and trucks.

Imports were up in every category, but some of that could be a sign of investments in future industrial capacity. Industrial supply orders from overseas were up 10% in the month and were up 60.4% from November 2020. While automotive imports were up 4.5% in November, they’re down 8.7% from last year.

The big increase in imports allowed stores to restock shelves and businesses to refill inventories to a limited degree. Wholesale inventories (a measure of spare parts, components needed for manufacturing and other non-retail supplies) grew 1.2% in November from October. Those inventories are up 15.7% from a year ago.

At the retail level, inventories grew 2% in November from October, Census Bureau data show. The biggest increase (4.1%) came from cars and trucks. Vehicle inventories fell slightly in October but rebounded. Still, the inventory hole created by chip shortages and other supply chain challenges is massive, and many dealer lots are still struggling to get inventory to sell. Compared to November 2020, motor vehicle inventories are still down 21.4%.

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