U.S. Trade Deficit Narrowed More than Expected in January

The U.S. trade deficit in goods and services (BOP basis) narrowed to $54.5 billion in January from a revised $72.9 billion in December (previously $70.3 billion), according to the U.S. Census Bureau. The goods deficit declined to $81.8 billion from $99.3 billion while the services surplus widened slightly to $27.3 billion from $26.3 billion in December. The Action Economics Forecast Survey looked for a deficit of $67.9 billion.

The real (inflation-adjusted) trade deficit in goods narrowed to $83.9 billion (2017$) from $97.9 billion in December (previously $97.1 billion). However, the January figure was larger than the Q4 average, implying that the trade deficit is on course to subtract from overall GDP growth in Q1.

Exports of goods and services rebounded in January, rising 5.5% m/m (10.4% y/y) following a 1.6% monthly decline in December (previously -1.7% m/m). Goods exports (Census basis) jumped 8.2% m/m or $14.8 billion after a 3.0% m/m decline in December and a 5.2% monthly decline in November. However, 60% of the rebound in January was accounted for by an $8.8 billion increase in exports of nonmonetary gold and other precious metals. Without the surge in these metal exports, the remainder of exports rose 3.5% m/m in January. Exports of nonmonetary gold and other precious metals are not included in the tabulation of GDP. Services exports increased 1.2% m/m (+6.3% y/y) in January on top of a 0.8% m/m increase in December.

By end use, the January jump in goods exports was unsurprisingly led by 15.1% m/m surge in exports of industrial supplies and materials. However, 94% of this increase was accounted for by the jump in exports of nonmonetary gold and other precious metals. Capital goods exports rose 8.8% m/m on top of a 4.2% increase in December. Exports of “other” goods surged 37.1% m/m, more than offsetting a 14.5% monthly decline in December and their first increase in four months. By contrast, auto exports slumped 6.0% m/m, their third consecutive monthly decline, and nonfood consumer goods exports ex autos plummeted 12.1% m/m, their third monthly decline in the past four months. For exports of services, travel declined for the first time in four months. Solid gains were posted by financial services, use of intellectual property, and other business services.

Imports of goods and services slipped 0.7% m/m (-11.3% y/y) in January, their first monthly decline in three months, after a 3.5% m/m rise in December and a 4.4% monthly gain in November. Goods imports (Census basis) fell 1.1% m/m in January, their first monthly decline in three months. Auto imports slumped 8.3% m/m, their fourth monthly decline in the past five months. Imports of nonfood consumer goods ex autos dropped 5.8% m/m in January, their third monthly decline in the past four months. Imports of industrial supplies fell 2.7% m/m following a 15.9% m/m surge in December. By contrast, capital goods imports jumped 3.1% m/m, their fourth consecutive monthly gain, while imports of “other” goods surged 7.3% m/m. Imports of services edged up 0.3% m/m in January after a 2.7% monthly rise in December, Travel imports, construction service imports, imported intellectual property, and imported maintenance services fell while imports of other business services, insurance services, and imports of personal and recreational services posted solid gains.

By country, the goods trade deficit with China widened marginally to $12.5 billion in January from $12.4 billion in December. Exports to China jumped 11.5% m/m and imports from China rebounded, rising 5.3% m/m following monthly declines in both November and December. The trade deficit with the European Union narrowed markedly to $6.1 billion in January from $11.1 billion in December. Exports to the EU fell 3.2% m/m, their third monthly decline in the past four months, while imports from the EU plummeted 13.2% m/m, also their third monthly decline in the past four months. The deficit with Japan widened to $5.5 billion in January from $5.3 billion.

The international trade data can be found in Haver’s USECON database. Detailed figures on international trade are available in the USINT and USTRADE databases. The expectations figures are from the Action Economics Forecast Survey in AS1REPNA.