Trade Deficit in U.S. Unexpectedly Narrows on Oil Imports
The trade deficit in the U.S. unexpectedly shrank in February as stabilizing overseas markets boosted exports and Americans imported less oil.
The gap narrowed by 3.4 percent to $43 billion from a revised $44.5 billion in January, Commerce Department figures showed today in Washington. The median forecast in a Bloomberg survey of 66 economists called for the deficit to be little changed at $44.6 billion. The number of barrels of crude oil imported into the U.S. in February was the smallest since 1996.
Apart from oil purchases, sustained spending by U.S. consumers and businesses will probably boost imports this year. Demand for American-made goods in markets such as China and Latin America also may keep growing, cushioning the crisis in Europe and limiting the trade gap.
“Global markets are holding up well” even as “Europe is struggling to right its economy,” Ryan Sweet, a senior economist at Moody’s Analytics Inc. in West Chester, Pennsylvania, said before the report. “Domestic demand is improving in the U.S. so that’s going to increase imports.”
Bloomberg survey estimates ranged from trade deficits of $41.2 billion to $47 billion. The Commerce Department revised the January shortfall from an initially reported $44.4 billion.
In a separate report, the Labor Department said today payrolls in the U.S. grew by 88,000 workers last month, the smallest in nine months, after a revised 268,000 gain in February that was higher than first estimated. The jobless rate fell to 7.6 percent from 7.7 percent.
Stock-index futures fell after the reports. The contract on the Standard & Poor’s 500 Index maturing in June was down 1.1 percent at 1,537.80 at 8:39 a.m. in New York.
Exports (USTBEXP) increased 0.8 percent to $186 billion in February, boosted by sales of fuel as well as motor vehicles and parts.
The import figures reflected 205 million barrels of crude oil, a decrease from the prior month and the fewest in 17 years.
Oil costs have been easing after a jump earlier this year. Brent crude traded on the ICE Futures Europe exchange in London averaged $116.07 in February, up from $112.32 a barrel the prior month. The average came down in March to $109.54, and the price further declined to $106.34 yesterday.
Excluding petroleum, the trade shortfall widened to $21.8 billion in February from $20.1 billion the previous month, today’s report showed.
After eliminating the influence of prices, which are the numbers used to calculate gross domestic product, the trade deficit shrank to $47.4 billion from $48.1 billion.
A weaker U.S. currency will make American exports more attractive to overseas buyers. As of March 29, the dollar had dropped 2.3 percent from last year’s peak on June 1 against a trade-weighted basket of currencies from its biggest trading partners, according to Federal Reserve data.
Demand continues to rise in the U.S. Consumer spending, which accounts for about 70 percent of the economy, climbed in February by the most in five months as the labor market improved.
3M Co. (MMM), the St. Paul, Minnesota-based maker of products ranging from Scotch tape to dental braces, is among companies saying growth in the U.S. will help cushion weakness in markets like Europe, especially in consumer electronics.
“We’re operating pretty steady in the U.S. and Latin America,” David Meline, chief financial officer, said at a March 21 conference. “In Asia, it’s more mixed. Western Europe continues to have a number of challenges.”
The trade gap with China was the smallest in almost a year, while the deficit with the European Union widened 1.3 percent in February on fewer exports.
Recent data indicate demand is stabilizing in China. The world’s second-largest economy expanded 7.8 percent in 2012, compared with its average 10.6 percent rate over the previous 10 years. Economists surveyed by Bloomberg News forecast a pickup to 8.1 percent in 2013, based on the median estimate.
American farm exports may top the record $142 billion forecast in February as agreements with China and Russia reduce trade barriers and buyers replenish supplies at lower prices, Agriculture Secretary Tom Vilsack said this week. China is projected to be the biggest buyer of U.S. farm products for a second straight year.
In Europe, the 17-nation euro economy is struggling to exit a recession that began more than a year ago, partly as financial institutions restrict access to credit. European Central Bank President Mario Draghi yesterday said the bank stands ready to cut interest rates if the economy deteriorates further, and officials are considering additional measures to boost growth.
To contact the reporter on this story: Shobhana Chandra in Washington at email@example.com
To contact the editor responsible for this story: Christopher Wellisz at firstname.lastname@example.org