Economy

February's International Trade Deficit Widens

Chris Lange

Published: April 5, 2016 10:15 am

Last Updated: January 13, 2020 11:08 am

The U.S. international trade balance for the month of February was released before the markets opened on Tuesday. The trade deficit came in at a wider-than-expected $47.1 billion, primarily due to a rising cross-border demand. The consensus estimate from Bloomberg called for a deficit of $46.2 billion.

Domestic demand increased as imports rose 1.3% to $225.1 billion in February, driven by a surge for consumer goods and also a gain in services. At the same time, foreign demand increased as exports rose 1.0% to $178.1 billion and include gains for the nation’s consumer goods, vehicles and agricultural products.

However there were signs of weakness on the export side, including for capital goods, where softness has indicated weak global business investment, as well as an uncommon decline, though only a marginal one, for the nation’s services.

The net gap would have been more significant if not for a sharp decline in the price of oil-related products. The price of imported crude averaged roughly $27.50 per barrel, which is the lowest since 2003 and down nearly $5 from January. This effect is likely to reverse in the next report, given oil’s price strength during March.

In terms of countries, the gap with China narrowed by nearly $1 billion in the month to $28.1 billion, while the gap with Canada, reflecting low oil prices in the month, narrowed by $1.5 billion to an even $1.0 billion. Gaps with the European Union and Mexico both widened, to $9.9 billion and $5.0 billion, respectively.