U.S. trade deficit widens in February as exports fall

A fragile E.U. recovery and a slowing down of developing markets could result in slower growth in the U.S.

By Ananth Baliga
U.S. trade deficit widens in February as exports fall
Imports were depressed on account of sluggish local demand, which was a result of the curtailed shopping season and factory output late last year and early 2014. (File/UPI/John Angelillo) | License Photo

WASHINGTON, April 3 (UPI) -- The U.S. trade deficit widened in February, reaching its highest level in five months, on account of weak exports and local demand.

U.S. exports fell 1.1 percent to $190.43 billion, whereas imports rose 0.4 percent to $232.73 billion, as reported by the Commerce Department Thursday. This led to a trade deficit of $42.3 billion, an increase of 7.7 percent over last month's $39.3 billion deficit. This was higher than the $38.5 billion estimate forecast by 69 economists polled by Bloomberg.


The deterioration in the trade deficit will further dampen growth in the first quarter, which is already slow on account of unusually harsh winter weather late last year and early this year. This disrupted shopping and personal consumption and affected factory activity.

“Trade is going to be a little bit of a drag for first-quarter growth,” said Guy Berger, a U.S. economist at RBS Securities in Stamford, Connecticut.

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U.S. exports to the European Union in February were down 2.5 percent from January, while exports to China were 4.6 percent lower.

February's drop in exports follows a small rise in exports in January, 0.6 percent, on account of strong overseas sales toward the end of last year.


Exports were depressed by declining sales of refined petroleum products, whereas fuel shipments in the past few months have risen on account of increased U.S. energy production. Crude-oil imports in February fell to the lowest level since October 2010 as the U.S. begins to produce more energy locally.

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An encouraging sign was the rise in automobile and consumer goods imports, which suggest that businesses are forecasting improved demand in the coming months. Data released earlier this week suggest stronger than expected auto sales and strengthened manufacturing activity.

The U.S. economy has shown signs of strengthening in March, which could lead to increased local consumption in the months ahead.

[Commerce Department] [Wall Street Journal] [Bloomberg]

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