By Nathalie Voit

The U.S. trade deficit rose nearly 20% in November as demand for imports far outpaced U.S. exports, the Commerce Department said Jan. 6.

The November 2021 trade gap in goods and services increased from an upwardly revised $67.2 billion in October to $80.2 billion, surpassing analysts’ expectations by nearly $3 billion, according to Reuters.

The goods deficit increased to a record-high $99 billion, fueled by a massive demand for overseas exports during the holiday season.

Imports of goods jumped $12.3 billion to $254.9 billion in November. Overall imports, including services, rose 4.6% to $304.4 billion for the month.

Industrial supplies and materials led the broad surge in imports, increasing by $5.9 billion in November. The retail sector followed suit, reporting a $3 billion increase in consumer goods. The motor vehicles, parts, and engines sector also posted strong gains, increasing by $1.2 billion for the month.

The import upswing was driven by stronger supply-chain performance as the backlog at U.S. ports slowly abated. Additionally, solid consumer spending during the holidays sent global trade roaring back.

“It’s the ongoing strength of U.S. retail spending that’s one of the big drivers of this,” said senior U.S. economist at Capital Economics Ltd. Andrew Hunter.

While the deficit sharply widened in November, a reviving tourism industry helped lift services exports as the country loosened its COVID-19 border restrictions for international travelers, the department said.

Exports for the month rose 0.2% to $224.2 billion, driven largely by a $2.2 billion boost to the travel industry and a $0.6 billion gain in transport.

Travel exports, or spending by tourists to the U.S., surged 36.4% to $8.1 billion following the White House travel ban lift on Nov.8. That figure was the highest since the beginning of the pandemic, Bloomberg said. 

However, goods exports decreased $2.9 billion due to a decline in capital goods and less industrial supplies and materials.

“Looking ahead, we expect the trade deficit to remain historically elevated until pandemic worries ease. Rising covid cases abroad once again threaten to constrain global demand, risking an even wider deficit if export growth slows more than imports,” said an economist at Oxford Economics, Nancy Vanden Houten.