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US trade deficit widens in February, but exports rebounding
[WASHINGTON] The US trade deficit widened more than expected in February as a rebound in exports was offset by an increase in imports, the latest indication that economic growth remained weak in the first quarter.
The Commerce Department said on Tuesday the trade gap increased 2.6 per cent to US$47.1 billion. January's trade deficit was revised slightly up to US$45.9 billion from the previously reported US$45.7 billion.
Economists polled by Reuters had forecast the trade deficit rising to US$46.2 billion in February. When adjusted for inflation, the deficit rose to US$63.3 billion, the largest since March last year, from US$61.8 billion in January.
The report joined data on consumer and business spending in suggesting that economic growth moderated further in the first quarter after slowing to a 1.4 per cent annualized rate in the final three months of 2015. Growth estimates for the first quarter are currently below a 1 per cent pace.
Trade, which has been constrained by a strong dollar and weak global demand, subtracted just over one tenth of a per centage point from gross domestic product growth in the fourth quarter.
In February, exports of goods rose 1.6 per cent to US$118.6 billion, increasing for the first time since September. Overall exports of goods and services advanced 1.0 per cent to US$178.1 billion.
Exports have been undercut by the buoyant dollar, which has made US-manufactured goods expensive relative to those of its main trading partners. Slowing growth in Europe and China has also eroded demand for US goods.
But with the dollar rally fading, February's nascent increase in exports is likely to be sustained.
A survey last week showed a gauge of new export orders received by manufacturers rose in March to its highest level since December 2014.
The dollar is down 1.3 per cent on a trade-weighted basis so far this year after gaining about 20 per cent against the currencies of the United States' main trading partners between June 2014 and December 2015.
In February, there were increases in exports of food, automobiles and parts, as well as consumer goods.
But exports of industrial supplies and materials were the lowest since March 2010. Capital goods exports hit their lowest level since November 2011. Petroleum exports fell to their lowest level since September 2010.
Exports to the European Union surged 10.2 per cent, while goods shipped to Canada and Mexico rose 6.0 per cent and 0.9 per cent respectively. Exports to China fell 2 per cent.
Imports of goods and services rose 1.3 per cent to US$225.1 billion.
Imports are being kept in check by ongoing efforts by businesses to reduce an inventory overhang. Lower oil prices and increased domestic energy production are also helping to curb the import bill.
In February, imports were driven by a surge in food imports, which hit a record high. But imports of industrial supplies and materials were the lowest since May 2009 in February. Petroleum imports touched their lowest level since September 2002. Oil prices averaged $27.48 per barrel in February, the cheapest since December 2003.
Imports from China fell 2.7 per cent. The drop in imports outpaced the fall in exports, pushing the politically sensitive US-China trade deficit down 2.8 per cent to US$28.1 billion in February.