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US trade deficit swells to $42.3 bn in February

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(GlobalPost/GlobalPost)

The US trade deficit increased sharply in February as imports rose and exports tumbled amid signs of slowing growth in China and Europe's tepid recovery, official data showed Thursday.

The nation's trade gap in goods and services with the rest of the world widened to a seasonally adjusted $42.3 billion, from an upwardly revised $39.3 billion in January, the Commerce Department said.

The shortfall has increased for three months in a row. Analysts on average had expected a smaller increase to $39.3 billion. The January trade deficit was previously reported at $39.1 billion.

In February, imports increased by $1.0 billion from January to $232.7 billion. The increase was led by imports of services, including payments for the rights to broadcast the 2014 Winter Olympics Games.

Exports fell by $2.0 billion to $190.4 billion, mostly due to a fall in goods exports, including industrial supplies and capital goods.

The US trade deficit for the first two months of 2014 declined 4.4 percent from a year ago.

Tu Packard of Moody's Analytics said the February trade numbers "reinforce our view of a gradual recovery in the US."

"Given the increase in both exports and imports of consumer goods and autos, global demand conditions appear to be fairly stable."

Recent data has shown the US economy is picking up after severe winter weather gripped large parts of the country in January and February, curbing consumer spending and business activity.

Economists are forecasting that the pace of US gross domestic product growth will accelerate as warmer weather settles in, with an expected rebound in consumer spending that accounts for the majority of US GDP.

Analysts said the wider deficit in February would be a drag on already weak first-quarter GDP growth.

Packard said the decline in February's goods exports would likely be temporary. "It does not mean that the global economic recovery has faltered."

In goods trade data that is not seasonally adjusted, the chronic gap with China narrowed sharply, by $7 billion to $20.9 billion, as imports from China plunged 20 percent.

US exports to the world's second-largest economy fell to $9.9 billion from $10.4 billion in January.

The gap with Canada, the nation's largest trade partner, shrank 53 percent to $1.9 billion.

The gap with Mexico increased to 4.0 billion from a five-year low of $2.8 billion in January.

The February trade shortfall with the European Union increased slightly to $9.1 billion.

With the 18-member eurozone, the gap was little changed at $7.4 billion.

"In the coming months we expect to see a pickup in the pace of US exports and imports as the recovery in the global economy gains traction," Packard said.

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http://www.globalpost.com/dispatch/news/afp/140403/us-trade-deficit-swells-423-bn-february-0