US trade deficit grows wider in February

Imports and Exports | | MIC Customs Solutions |

The US trade deficit unexpectedly grew wider in February 2016, with a rebound in exports offset by an increase in imports.

The latest US trade data has indicated a widening of the country's trade deficit during February 2016.

With the trade gap expanding by 2.6 per cent during the month, February marked the third consecutive month of trade deficit growth, with the new seasonally adjusted total of $47.1 billion (€41.26 billion), higher than the $46.2 billion total predicted by economists.

This represents the highest trade deficit total since August 2015, with exports edging up by one per cent during the month to $178.1 billion - the first such rise since last September - and imports advancing by 1.3 per cent to $225.1 billion.

The unexpected news is expected to have a negative impact on the country's first-quarter growth figures, with economists now predicting that the rate of annualised growth in Q1 will only be around 0.4 per cent.

Import figures were bolstered by increases in sales of pharmaceutical drugs, toys, games and sporting goods, which could be an indicator that US consumer spending is on the rise, and that this is having a positive impact on the performance of the economy.

However, exports continue to be hindered by the strength of the US dollar harming the competitive pricing of American-made goods, a trend that is being compounded by weakening demand from key territories like China and Europe.

Chris Rupkey, chief economist at MUFG Union Bank in New York, told Reuters: "There are some green shoots appearing this spring in the economic data which makes us more confident that 2016 is going to be a good year after a step-down in expectations and hopes at the start of the year."

However, Daniel Silver, an economist at JPMorgan, cautioned: "It is not clear if the solid gain in exports in February represents a change in the underlying trend or simply reflects noise in the series."