Trade could boost first quarter GDP ‘probably by close to a full point on the growth rate’…
(AFP) The US trade deficit in February fell to its lowest level in eight months, thanks in part to rising aircraft and auto exports, according to government data released Wednesday.
It was the second month in a row that the trade deficit had declined — after hitting a 10-year high in December — which also was helped by the steady rise in exports of US services, according to the Commerce Department.
The narrowing trade gap should support GDP growth in the first quarter and offers relief from what had been a frustrating data point for President Donald Trump since his aggressive tariff strategy was aimed at reducing the deficit.
Trump views the deficit as a job killer and he has launched a multi-front trade offensive with all major US trading partners.
The trade gap fell 3.4 percent to $49.4 billion, seasonally adjusted, well below the $54 billion that economists had been expecting.
The result, which is subject to revision, put the first two months of the year 7.6 percent below the same period of 2018.
At $70 billion for the month, services exports were the highest on record, helped by a $200 million increase in exported transport services.
Meanwhile, crude oil imports fell to their lowest volume in nearly 27 years, according to the report.
Gap narrows with China
Jim O’Sullivan of High Frequency Economics said the new data puts the trade deficit “down significantly” from the final quarter of 2018.
At this pace, trade could boost first quarter GDP, he said, “probably by close to a full point on the growth rate,” he said in a note to clients. That would be a welcome development for Trump as the US economy slows.
In a particularly positive point for Trump, the goods deficit with China fell $3.1 billion to $30.1 billion compared to January, helped in part by a recovery for the month in soybean exports.
Total exports of the crop rose $190 million to $1.4 billion.
Meanwhile, the deficit in goods alone with Japan, which just opened talks on a new trade agreement with the United States, jumped $1.3 billion to $6.7 billion due to a slump in US exports to the Asian economy.
The goods deficit with the EU — which is planning to open trade talks with Washington — fell 5.3 percent to $12.4 billion.
Total exports of US-made goods rose $2.1 billion to nearly $140 billion for the month, with the volatile civilian aircraft exports up $2.2 billion and auto exports up $600 million.
The February numbers, however, will not reflect difficulties suffered by Boeing, which last month suspended deliveries of its top-selling 737 MAX aircraft following fatal crashes in Ethiopia and Indonesia in recent months.
US imports were largely stable for the month, with a decrease in imports of industrial supplies partly offsetting a $2.1 billion gain in imports of mobile phones and other household consumer goods.
© Agence France-Presse