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International Trade: Smaller Deficit As Imports Fall

April 4, 2017

Bottom Line: The trade deficit narrowed moderately in February with imports falling modestly. While likely too early to be related to policies being discussed in Washington, the decline in imports was led by oil, consumer goods and autos. The January/February average for real trade balance for goods is slightly above its Q4 levels, suggesting a negative contribution to the Q1 GDP.

The International Trade Deficit NARROWED by $4.6 billion to $43.6 billion in February, compared with market expectations for an increase to a $44.6 billion deficit. For the first 2 months of the year, the trade deficit has averaged $45.9 billion, modestly above from the average of $44.5 billion for the same period in 2016.

Exports ROSE by 0.2% to $192.9 billion after an increase of 0.8% in the prior month. The declines in food, feed, and beverages and capital goods were more than offset by increases in consumer goods and other goods. Export growth is now 6.7% ABOVE their year ago level.

Imports FELL by 1.8% to $236.4 billion after an increase of 2.3% in the prior month. The declines in consumer goods and motor vehicles and parts were partially offset by increases in industrial supplies and materials and food, feed, and beverages. In February, oil imports decreased. Oil imports 2017 year-to-date levels are now moderately below the 2016 year-to-date levels. Imports are now 4.5% ABOVE their year ago level.

Article by Contingent Macro Advisors