US trade deficit widens for a third month to US$70.5 billion

THE US trade deficit widened for a third-straight month in February as the value of exports fell more than imports.

The gap in goods and services trade grew 2.7 per cent to US$70.5 billion, the widest in four months, Commerce Department data showed on Wednesday (Apr 5). The figures aren’t adjusted for inflation. The median estimate in a Bloomberg survey of economists called for a US$68.8 billion gap.

The value of imports decreased 1.5 per cent, while exports fell 2.7 per cent – both reflecting weaker merchandise trade.

On an inflation-adjusted basis, the goods-trade deficit increased to US$104.6 billion, also the widest in four months. US exports of consumer goods, motor vehicles and capital equipment all declined in February.

While the merchandise trade deficit widened, the US services surplus increased. Travel exports – or spending by visitors to the US – increased to a three-year high. Travel imports, a measure of Americans travelling abroad, were little changed. 

Imports of consumer goods fell for the first time in three months on an inflation-adjusted basis. Motor vehicle imports also declined.

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The drop in both exports and imports highlights softening demand, particularly for goods, at home and abroad amid an ongoing shift to spending on services as well as an uncertain economic outlook. 

Prior to Wednesday’s report, the Federal Reserve Bank of Atlanta’s GDPNow estimated net exports would add 0.44 percentage point to gross domestic product in the first quarter.

The US goods-trade deficit with China, on an adjusted basis, widened to US$25.2 billion, the most in four months. BLOOMBERG