USA trade deficit rises in February to 6-month high

A third report from the Labor Department showed hiring by US employers increased 297,000 to 5.4 million in February, the highest level since November 2006. The last time the trade gap was higher was in August 2015.

Net exports should add two percentage points to growth in the first quarter, lifting overall growth to above three percent in the first three months of this year, Kavcic said.

The February increase in the goods and services deficit reflected an increase in the goods deficit of $0.9 billion to $64.7 billion and a decrease in the services surplus of $0.3 billion to $17.7 billion. Economists are hoping that strong domestic demand, fueled by rising employment and higher consumer spending, will be able to offset the adverse impact of falling exports on American manufacturers. When adjusted for inflation, the shortfall rose to $63.3 billion, the largest since March past year, from $61.8 billion in January.

The trade deficit in goods – cars, appliances, clothing, electronics and the like – rose 3.3% with China to $32.1 billion.

Statscan said the export slump was driven by sharp declines in consumer goods, energy products and the auto sector.

The Commerce Department revised the deficit in January was revised to $45.9 billion from $45.7 billion.

The dollar is down 1.3 percent on a trade-weighted basis so far this year after gaining about 20 percent against the currencies of the United States’ main trading partners between June 2014 and December 2015. Petroleum exports fell to their lowest level since September 2010.

However there were signs of weakness on the export side, including for capital goods, where softness has indicated weak global business investment, as well as an uncommon decline, though only a marginal one, for the nation’s services.

Imports from China fell 2.7 per cent. The drop in imports outpaced the fall in exports, pushing the politically sensitive US-China trade deficit down 2.8 per cent to US$28.1 billion in February.