Reporting on the U.S. trade deficit, otherwise known as the trade gap, from the U.S. Commerce Department. (Photo: Reuters)
The Commerce Department said on Thursday the U.S. trade deficit narrowed 16.9 percent to $35.4 billion, or its lowest level since October 2009. January’s disappointing report on the trade balance was revised to $42.7 billion from a previously reported $41.8 billion.
Economists polled by Reuters had forecast the trade deficit slipping to $41.2 billion. When adjusted for inflation, the deficit narrowed to $50.8 billion in February from $54.6 billion the prior month.
It is unclear whether the report with rebuff the latest round of weak economic data released this week, which forced economists to consider further lowering their first-quarter growth estimates. The consensus estimates currently range between an abysmal 0.9 and 1.4 percent annualized growth rate. The government adjusted its data last week to show the economy grew at a 2.2 percent rate in the fourth quarter.
A now-resolved labor dispute, a relatively stronger U.S. dollar (USDUSD), increased oil prices and weaker global demand all contributed to a narrowing trade gap most economists view as temporary. Thus, while the smaller trade deficit is good news for gross domestic product (GDP), it does little to nothing to change consensus views that economic growth slowed sharply in the first quarter.
Imports plunged 4.4 percent to $221.7 billion in February, which is the lowest since April 2011, while imports of petroleum products were the lowest since September 2004.
Exports fell 1.6 percent to $186.2 billion in February, or the smallest since October 2012. Exports to Canada and Mexico – the two main U.S. trading partners – also tanked in February, while exports to China plunged 8.9 percent. Exports to the European Union were unchanged.
Imports from China plummeted 18.1 percent, forcing the politically charged U.S.-China trade deficit down 21.2 percent to $22.5 billion.
