By Lucia Mutikani

WASHINGTON, (Reuters) – The U.S. trade deficit soared to a new record in August. This was due in part to imports and businesses rebuilding inventories. It is the latest indication that the economy has slowed down in the third quarter.

Commerce Department reported Tuesday that the trade deficit jumped 4.2% to $73.3 Billion last month. This is the largest since records began being kept by the government. Reuters polled economists to forecast that the trade deficit would increase to $70.5 billion.

After inflation adjustment, August’s goods trade deficit rose $1.9 billion from $101.8 billion. Following government data on Friday that indicated high inflation had severely affected consumer spending in July with moderate recovery in August, the report was now available.

Atlanta Federal Reserve predicts that the annualized growth in gross domestic products will be 2.3% for the third quarter. In the second quarter, GDP grew 6.7%.

For four consecutive quarters, trade has been a drag on GDP growth.

The August increase in imports of goods was 1.1%, to $239.1 trillion. Consumer goods like pharmaceutical preparations and toys, games, and sporting goods led the increase. Imports of industrial materials and supplies also increased.

However, imports of motor vehicle parts, engines and vehicles decreased by $1.5 million. This is due to the global shortage of semiconductors which is limiting production. While goods demand remains high, more people have begun to get COVID-19 vaccines.

In August, imports of services rose $1.3 billion to $47.9 trillion. Imports rose 1.4% overall to $287.0billion, which is the highest level ever recorded.

Exports of goods rose 0.7% to $149.7 million, a new record. Industrial supplies and other materials like non-monetary gold and were able to lift exports. Exports of parts, engines and motor vehicles fell along with capital goods such as civilian 239105/2364.5

aircraft and heavy machinery. Also, corn exports dropped.

In August, exports of services fell $0.1 billion to $64.0 trillion. This is due to weaker travel receipts and pandemic-related restrictions. There was an increase in business services exports and the charges for using intellectual property. Total exports rose 0.5% to $213.7 Billion in August. It was the highest level since May 2019.