The U.S. trade gap widened to a record US$38.5 billion in August. The wider gap reflects a $1.1 billion decline in exports, and $2.3 billion worth of imports, pushing imports to their highest level since March 2001.

BMO Nesbitt Burns economists say that the data is distorted due to the West coast dock workers’ lockout, which had U.S. firms building up inventories in anticipation. The widening of the trade gap will weigh on third quarter growth estimates, says BMO, and has also led to some modest selling pressure on the U.S. dollar, in part as the current account deficit is likely to remain at a hefty 5% of GDP.

RBC Financial Group economists suggests that the trade deficit may be a larger drag on economic growth in third quarter than originally thought. “However, given the strength of consumer expenditures in the third quarter, growth will likely come in at a very respectable 4% range. On this basis, a wider trade deficit should not pose as much of a danger to the headline growth rate.”

CIBC World Markets is calling for 3.8% GDP growth, saying its call had already assumed that the one-month trade improvement wouldn’t last. “While
these numbers were weaker than we expected in nominal terms, the real trade balance is running close to our goods forecast.”