International Trade: Widening Trend Accelerates As Exports Slump

Bottom Line: The trade deficit widened more than expected in January, mostly due to a sharp decline in the value of aircraft exports, a volatile component. Still, the report highlights a sharp widening in the broader trend. Export growth is slowing, while import growth continues at a faster pace amid higher oil prices. While these data were not impacted by any new US policies, the report will certainly create more fodder for the discussion around tariffs and other protectionist measures. The International Trade Deficit WIDENED by $2.7 billion to $56.6 billion in January, compared with market expectations for an decline to a $55.0 billion deficit. For the first month of the year, the trade deficit has averaged $56.6 billion, moderately above from the average of $48.7 billion for the same period in 2017. Exports FELL by 1.3% to $200.9 billion after an increase of 1.7% in the prior month. The declines in capital goods and industrial supplies and materials were partially offset by increases in consumer goods and motor vehicles and parts. Export growth is still 5.1% ABOVE their year ago level. Imports were NEARLY UNCHANGED 0.002% to $257.5 billion after an increase of 2.6% in the prior month. The declines in capital goods and consumer goods were partially offset by increases in industrial supplies and materials and . In January, oil imports increased. Oil imports 2018 year-to-date levels are now moderately below the 2017 year-to-date levels. Imports are now 7.4% ABOVE their year ago level.