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Economy in Brief

U.S. Trade Deficit Surprisingly Deeper in February
by Tom Moeller April 10, 2008

The U.S. foreign trade deficit widened surprisingly to $62.3B from 59.0B in January which was only slightly revised. Consensus expectations had been for a shallower deficit of $57.5B during February.

Much of the surprise in the February trade report was that despite the weaker U.S. economy, imports of nonpetroleum products jumped 5.4%. That rise fully reversed declines in three of the prior four months. The m/m gains in imports of capital goods (5.3% y/y), motor vehicles (7.3% y/y), and nonauto consumer goods (3.2% y/y) all were quite strong and reversed weakness posted during prior months.

Lower oil prices caused the value of energy related imports to decline by 12.5% and petroleum imports to fall by 5.1%. Crude oil prices rose just 0.8% to an average $84.76 per barrel but that was a record high. The quantity of oil imports, however, responded to the higher prices and fell 11.1% m/m (+13.3% y/y).

U.S. exports during February continued strong and rose 2.0% after a 1.7% rise in January. Exports of goods overall rose 2.5% (21.2% y/y) due to strong exports of foods, feeds & beverages which rose 7.8% (47.4% y/y). Exports of industrial supplies & materials also jumped by 6.3% (33.9% y/y) but exports of capital goods fell by 1.7% (+12.2% y/y) for the third decline in the last four months. Exports of civilian aircraft fell 3.0% (+25.1% y/y) after a sharp January decline. Exports of computers rose 6.1% (0.55 y/y) after a strong 5.3% gain January. Exports of nonauto consumer goods fell 1.0% (+15.3% y/y) after two months of strong gain.

The U.S. trade deficit in goods with China eased slightly m/m to $18.40B and remained well below last year's monthly record of $25.9B. The slower U.S. economy slowed growth in imports from China to 4.5% during the last twelve months after growth between 10% and 30% during the last several years. Exports to China in February grew 24.7% y/y after growth 20% and 30% during the prior for years.

Foreign Trade  February January Y/Y 2007 2006 2005
U.S. Trade Deficit $62.3B $59.0B $58.2B
$708.5 $758.5 $714.4B
Exports - Goods & Services 2.0% 1.7% 20.8% 12.6% 12.7% 10.9%
Imports - Goods & Services 3.1% 1.8% 16.4% 6.0% 10.4% 12.9%
  Petroleum -5.1% 11.3% 78.8% 9.5% 20.1% 39.6%
  Nonpetroleum Goods 5.4% -0.6% 6.3% 4.6% 9.1% 10.3%
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