Trade Deficit in US Narrows in February to Four-Month Low
The U.S. trade deficit narrowed in February to a four-month low as imports declined and exports improved amid a brighter outlook for global manufacturing, Commerce Department data showed April 4.
Key Points
• Gap decreased 9.6% to $43.6 billion from a revised $48.2 billion in January.
• Compares with $44.6 billion median estimate of economists; January gap was originally estimated at $48.5 billion.
• Merchandise-trade deficit shrank to $65 billion from $69.5 billion; advance February figures showed $64.8 billion last week.
Big Picture
As the gap shrank in February, global growth prospects were improving, giving U.S. exporters a boost. Exports of goods and services reached the highest level since the end of 2014. The narrowing of the deficit may mean trade will be less of a drag on growth in the first quarter. Fading in dollar strength and a pickup in manufacturing sentiment could be a further boon to trade in the months ahead.
Imports declined in February by the most in nearly a year as demand for consumer goods and automobiles waned.
Just as some analysts attributed January’s deficit, the widest in almost two years, to a rush of shipments ahead of the Chinese New Year holiday, the February figure represented a reversal of that effect. China’s own trade data typically show big swings in January and February.
The Census Bureau figures showed America’s merchandise imports from China declined by $8.6 billion in February on an unadjusted basis, the biggest drop on record. The U.S. goods trade deficit with China narrowed to $23 billion.
The government’s figures will provide critical context as the administration targets partners for better deals in the months ahead. On March 31, Trump ordered a comprehensive study to identify trade abuses by other countries that have contributed to the U.S. deficit, to be completed within 90 days.
President Trump will meet with Chinese leader Xi Jinping for the first time on April 6, after Commerce Secretary Wilbur Ross labeled China last week as “one of the most protectionist” countries.
Other Details
• After eliminating the effects of price fluctuations, which generates the numbers used to calculate GDP, the gap narrowed to $59.7 billion from $65.1 billion.
• Imports decreased 1.8% to $236.4 billion.
• Exports increased 0.2% to $192.9 billion, the highest since December 2014.
• Value of shipments of motor vehicles and parts from the U.S. was the highest since July 2014.
