US trade deficit hits eight-month low as Chinese imports drop3 min read . Updated: 17 Apr 2019, 07:18 PM IST
- Trade deficit falls 3.4% to $49.4 bln in February
- Exports increase 1.1%; imports rise 0.2 %
The surprise narrowing in the trade gap reported by the Commerce Department on Wednesday also implied a much stronger pace of US economic growth in the first quarter than initially anticipated at the start of the year.
The 20.2 % drop in imports from China was the main driver behind a nearly 3.4 % improvement in the US trade deficit to $49.4 billion, data from the Commerce Department showed. Economists polled by Reuters had forecast the trade shortfall would widen to $53.5 billion in February.
The politically sensitive goods trade deficit with China - a focus of the Trump administration's protectionist trade policy - decreased 28.2 % to $24.8 billion in February as US exports to the world's No. 2 economy jumped 18.2 %.
But even with the improvement, the trade deficit remains large and February's drop in Chinese imports could be temporary. The trade data have been volatile in recent months amid big swings between exports and imports, because of the United States' conflicts with trading partners, including China.
Washington last year imposed tariffs on $250 billion worth of goods imported from China, with Beijing retaliating with duties on $110 billion worth of American products. Trump has delayed tariffs on $200 billion worth of Chinese imports and talks to end the trade impasse continue.
The US goods trade deficit declined 1.7 % to $72.0 billion in February, also the lowest level since last June.
When adjusted for inflation, the overall goods trade deficit fell $1.8 billion to $81.8 billion in February. The average goods trade deficit for January and February is below the fourth-quarter average. This suggests that trade could provide a boost to gross domestic product in the first quarter after being neutral in the October-December period.
SLOWING DOMESTIC DEMAND
Growth estimates for the January-March quarter are in a 1.5 % to 2.3 % annualized range, largely reflecting an accumulation of inventories amid slowing domestic demand. The economy grew at a 2.2 % rate in the fourth quarter, slowing from the July-September period's brisk 3.4 % pace.
US Treasury yields rose slightly after the release of the data. US stock index futures were trading higher while the dollar was largely unchanged against a basket of currencies.
The trade deficit in February was pushed down by a 1.1 % jump in exports to $209.7 billion. Exports of services were the highest on record.
Goods exports increased 1.5 % to $139.5 billion in February. The surge in goods exports is a hopeful sign for global economic growth, which has showed signs of slowing in recent months.
Exports of motor vehicles and parts increased by $0.6 billion in February. Shipments of civilian aircraft soared by $2.2 billion in February. But commercial aircraft exports are likely to decline in the months ahead following Boeing's decision to suspend deliveries of its troubled 737 MAX aircraft.
The MAX planes have been grounded indefinitely following two deadly crashes.
There was a modest increase in soybean exports.
In February, imports rose 0.2 % to $259.1 billion. Consumer goods imports increased by $1.6 billion in February, led by a $2.1 billion rise in imports of cellphones and other household goods. Imports of industrial supplies and materials fell by $1.2 billion. Capital goods imports rose slightly.
Crude oil imports fell to 173.7 million barrels, the lowest since March 1992, from 223.1 million barrels in January. An increase in domestic production has seen the United States become less dependent on foreign oil.
Imported oil prices averaged $46.89 per barrel in February, up from $42.59 in January.
This story has been published from a wire agency feed without modifications to the text.