The U.S. goods trade deficit shrank sharply in August as imports tumbled more than exports, while wholesale and retail inventories showed little movement. The latest figures from the Census Bureau point to a more cautious stance among wholesale distributors, who appear reluctant to restock aggressively amid tariff uncertainty and softening demand.
The goods trade gap fell to $85.5 billion in August from $102.8 billion in July. Imports of goods dropped by $20 billion to $261.6 billion, while exports slipped by just over $2 billion to $176.1 billion. Wholesale inventories stood at $905.2 billion, down 0.2% from July and just 0.7% a year earlier, while retail inventories were unchanged at $809.4 billion, up 1% year over year. Both changes were small enough to be statistically indistinguishable from zero.
Economists say the flat inventories reflect both restrained demand and businesses’ hesitation to stock up while trade policy remains unsettled.
For distributors, the data highlights a shift away from the stockpiling seen during the height of supply chain disruptions. Companies are holding inventories closer to demand levels, limiting cash tied up in warehouses while tariffs and slower trade make pricing less predictable. That discipline helps avoid overhangs but also risks leaving firms exposed if demand rebounds more quickly than expected.
Not all sectors showed weakness. New orders for manufactured durable goods rebounded in August, rising 2.9% to $312.1 billion after two months of declines. Transportation equipment drove much of the increase, up 8% to $110.2 billion. The rebound suggests steady demand in industrial and construction markets, a potential lifeline for distributors aligned with capital goods.
The Census Bureau will release its next advance report on October 29, which will offer further clues on whether distributors are simply pausing restocking or shifting into a longer period of tighter inventory management.
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