• The foreign trade deficit in goods and services fell significantly.

• Imports fell sharply while exports slipped.

The U.S. trade deficit in goods and services narrowed to $39.93 billion in February from $45.48 billion in January, revised from $45.34 billion. It was the smallest deficit since September 2016. A $40.0 billion deficit had been expected in the Action Economics Forecast Survey. Exports slipped 0.4% both m/m and y/y after a 0.6% January easing. Imports fell 2.5% (-4.7% y/y) after a 1.7% decline.

The trade deficit in goods narrowed to $61.2 billion last month as goods exports rose 0.7% (-1.5% y/y). A 4.1% rise (-1.0% y/y) in auto exports was countered by a 4.2% decline (-10.2% y/y) in nonauto consumer goods exports. Imports of goods fell 2.4% (-5.8% y/y). Petroleum imports fell 1.3% (+0.3% y/y) as the price of crude oil fell to $57.24 per barrel. Nonpetroleum imports declined a greater 2.6% (-6.3% y/y). Capital goods imports fell 6.7% (-9.4% y/y) and nonauto consumer goods imports were off 2.1% (-8.4% y/y).

The services trade surplus eased to $21.28 billion and has been fairly stable for a year. A 2.4% decline (+1.6% y/y) in exports reflected a 7.0% fall (-8.3% y/y) in travel which was accompanied by zero change (+3.3% y/y) in charges for intellectual property. Imports of services declined 2.7% (-0.1% y/y) reflecting a 6.2% weakening (-4.9% y/y) in travel imports. The travel ban with China began on January 31, 2020. Intellectual property imports rose 0.3% (2.8% y/y) in February.

The goods trade deficit with China narrowed sharply to $19.7 billion (SA) in February. This compared to a record $43.1 billion deficit in October 2018. U.S. exports to China fell 18.4% y/y while imports fell 30.8% y/y. The trade deficit with the European Union narrowed to $12.6 billion (SA) in February, the smallest deficit in 12 months. Exports to the EU were off 23.2% y/y while imports weakened 15.8% y/y. The trade deficit with Japan narrowed to $5.1 billion (SA) as exports to Japan rose 7.5% y/y while imports from Japan fell 9.2% y/y.

The international trade data can be found in Haver's USECON database. Detailed figures on international trade are available in the USINT database. The expectations figures are from the Action Economics Forecast Survey, which is carried in AS1REPNA.

The Uncertainty Channel of the Coronavirus from the Federal Reserve Bank of San Francisco is available here.