The US trade deficit widened more than expected in August as imports jumped to a record high against the backdrop of robust domestic demand, keeping trade on track to again subtract from economic growth in the third quarter.
The trade deficit widened to USD105.6b in Aug-26 from USD92.8b in Jul-26, increasing by +13.7%mom, exceeding market expectations of around USD102.0b. The deterioration was primarily driven by stronger import growth, suggesting robust domestic demand continued to support consumption and business spending during the month.
Exports increased by +1.4%mom to USD315.2b in Aug-26, supported by higher shipments of industrial supplies and materials, particularly crude oil and nonmonetary gold. Exports of capital goods also rose, led by semiconductors and computers, indicating continued strength in selected technology-related segments.
Meanwhile, imports grew at a faster pace of +4.3%mom to USD420.8b, driven mainly by industrial supplies and materials as well as capital goods. Notably, imports of semiconductors remained robust, reflecting ongoing investment in AI-related infrastructure and equipment. The stronger growth in imports relative to exports resulted in a wider trade deficit during the month.
Looking ahead, the widening trade deficit suggests net exports are likely to remain a drag on US economic growth in 3Q26. Nevertheless, the underlying details point to continued resilience in domestic demand, as stronger imports were largely driven by consumer spending and business investment rather than weak export performance. In particular, sustained demand for capital goods and semiconductor-related products indicates that investment in technology and AI infrastructure remains supportive of economic activity.
MBSB in its notes said that a persistently wide trade deficit could continue to weigh on headline GDP growth despite otherwise resilient domestic spending conditions
