U.S. Trade Deficit Shrinks To Lowest Since 2002

January's U.S. foreign trade deficit narrowed again to its shallowest level since the summer of 2002. The deficit of  $36.0B narrowed from the unrevised December figure of $39.0B. Lower oil prices and the U.S. recession acted to reduce imports to their lowest level since 2005 while recessions abroad reduced exports to their lowest since mid-2006. Consensus expectations had been for a January deficit of $38.0B.

Adjusted for price inflation, the trade deficit in goods actually widened, primarily due to lower energy prices. The real trade deficit in goods increased versus December to its deepest since October. It has been roughly stable since last spring.

During January the 20.3% m/m decline in crude oil prices to an average $39.81 caused overall petroleum imports to drop by 18.4% to a level which was half what they were one year ago. In volume terms, however, petroleum imports slipped just 1.4% (-3.9% y/y) and they have been roughly flat since 2004.

Reflecting the U.S. recession, measured in chained-2000 dollars, nonoil imports fell another 5.1% (-17.6% y/y) after similar declines during the prior two months. The chained-dollar value of imports of automotive vehicles & parts fell by nearly one quarter month-to-month and they were down by nearly one half from their year ago level. Further reflecting the U.S. recession was a 1.4% decline in real imports of nonauto consumer goods (-10.2% y/y) to their lowest level since 2005. Real imports of nonauto capital goods dropped by 6.0% (-16.1% y/y) for their fourth consecutive monthly decline. These imports were at their lowest since 2005.

Services imports again were weak, down for the fifth consecutive month. The 1.9% decline brought them 4.4% below last year's level and reflected lower travel imports (-6.9% y/y). Passenger fares fell by 4.2% versus January of 2008.

Recessions abroad lowered real U.S. exports of goods for the fifth consecutive month. January's 8.6% decline (-17.8% y/y) dropped them to the lowest level since late-2005. The chained dollar value of capital goods exports declined 8.9% (-17.4% y/y) to their lowest level since late 2005. Exports of nonauto consumer goods also dropped hard. The 8.2% decline (-15.7% y/y) pulled them to their lowest since 2006. Real exports of automobiles & parts fell an even steeper 28.5% from December. They are off by half during the last year.

Nominal exports of services fell 2.4% (-4.6% y/y) for the fourth drop in the last five months. Travel exports were down 17.9% from their peak during August of last year while passenger fares fell 16.8%.

The U.S. trade deficit in goods with China deepened slightly m/m to $20.6B. Exports to China fell 28.6% y/y while U.S. imports were off just 5.4%. The trade deficit with Japan narrowed sharply to $4.3B, its shallowest since 1997. Imports fell by nearly one third from last year while exports fell 22.8%.

The international trade data can be found in Haver's USECON database. Detailed figures are available in the USINT database.