U.S. Trade Deficit Improves With Higher Exports

The U.S. foreign trade deficit during February eased to $43.0 from $44.5B in January, barely revised from $44.4B. A $44.6B deficit had been expected. The m/m deficit improvement owed to a 0.8% gain (3.2% y/y) in exports while imports were unchanged (1.9% y/y). In chained 2005 dollars, the deficit in goods improved slightly to $44.4B but was barely changed from $44.9B twelve months ago. Real exports inched up 0.2% (2.2% y/y) while real imports slipped 0.3% (+3.2% y/y).

Real merchandise exports ticked up 0.2% (2.2% y/y) as industrial supplies, mostly petroleum products, recovered 2.9% (4.7% y/y). The constant dollar value of motor vehicle exports again rose 1.2% (1.5% y/y). Real exports of foods, feeds and beverages declined 2.6% (+2.8% y/y) while real exports of nonauto consumer goods exports fell 1.9% (+2.2% y/y). Real capital goods exports declined 2.0% (-0.5% y/y). Services exports notched up 0.4% (3.5% y/y). Travel exports gained 0.8% (5.2% y/y) as the dollar's low value prompted more visits to the U.S. from abroad.

The constant dollar value of U.S. imports fell 0.3% (+3.2% y/y) as the real in the value of petroleum imports fell 5.5% (-4.0% y/y). The quantity of petroleum product imports was off 20.1% m/m and was down 8.0% y/y. The price of crude oil improved m/m to $95.96 from $94.08 but was down from $103.63 one year earlier. Real imports less petroleum gained 0.8% in February (4.8% y/y). Real auto imports jumped 4.6% (-0.6% y/y) while real consumer goods excluding autos increased 1.5% (12.1% y/y). The constant dollar value of capital goods imports rose 0.7% (4.4% y/y) and real imports of foods, feeds & beverages gained 0.3% (6.8% y/y). Nominal services imports gained 0.6% (0.2% y/y) as travel imports increased 0.9% (-3.2% y/y).

By country, the February trade deficit in goods with mainland China improved month-to-month but deepened y/y to $23.4B. Exports to China rose 6.4% y/y while U.S. imports increased 16.3% y/y. With Japan, the deficit was roughly stable m/m yet improved y/y to $5.9B. U.S. exports fell 8.0% y/y but imports declined a greater 12.0% y/y. The deficit with the European Union was roughly unchanged m/m at $8.8B and compared to $5.9B twelve months earlier. U.S. exports fell 10.9% y/y but imports increased 1.3% y/y.

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

Communication in Monetary Policy is last week's speech by Federal Reserve Vice Chair Janet L. Yellen and it is available here.