WASHINGTON, (Reuters) – The U.S. trade deficit fell to an eight-month low in February as exports to China surged, helping to eclipse a rebound in overall imports, which could boost economic growth estimates for the first quarter.
The Commerce Department said on Wednesday the trade deficit dropped 3.4 percent to $49.4 billion, the lowest level since June 2018. January’s trade gap was unrevised at $51.1 billion.
Economists polled by Reuters had forecast the trade shortfall would widen to $53.5 billion in February. The goods trade deficit declined 1.7 percent to $72.0 billion, also the lowest level since last June.
The trade data have been volatile in recent months amid big swings between exports and imports because of the United States’ conflicts with trading partners, including China.
Washington last year imposed tariffs on $250 billion worth of goods imported from China, with Beijing retaliating with duties on $110 billion worth of American products. U.S. President Donald Trump has delayed tariffs on $200 billion worth of Chinese imports and talks to end the trade impasse continue.
The politically sensitive goods trade deficit with China – a focus of Trump’s “America First” agenda – decreased 28.2 percent to $24.8 billion in February as imports from the world’s No. 2 economy tumbled 20.2 percent. Exports to China jumped 18.2 percent in February.
When adjusted for inflation, the overall goods trade deficit fell $1.8 billion to $81.8 billion in February. The average goods trade deficit for January and February is below the fourth-quarter average. This suggests that trade could provide a boost to gross domestic product in the first quarter after being neutral in the October-December period.
Growth estimates for the January-March quarter are in a 1.5 percent to 2.3 percent annualized range, largely reflecting an accumulation of inventories amid slowing domestic demand. The economy grew at a 2.2 percent rate in the fourth quarter, slowing from the July-September period’s brisk 3.4 percent pace.
The trade deficit in February was pushed down by a 1.1 percent jump in exports to $209.7 billion. Exports of services were the highest on record.
Goods exports increased 1.5 percent to $139.5 billion in February. The surge in goods exports is a hopeful sign for global economic growth, which has showed signs of slowing in recent months.
Exports of motor vehicles and parts increased by $0.6 billion in February. Shipments of civilian aircraft soared by $2.2 billion in February. But commercial aircraft exports are likely to decline in the months ahead following Boeing’s decision to suspend deliveries of its troubled 737 MAX aircraft.
The MAX planes have been grounded indefinitely following two deadly crashes.
In February, imports rose 0.2 percent to $259.1 billion. Consumer goods imports increased by $1.6 billion in February, led by a $2.1 billion rise in imports of cellphones and other household goods. Imports of industrial supplies and materials fell by $1.2 billion.
Crude oil imports fell to 173.7 million barrels, the lowest since March 1992, from 223.1 million barrels in January. An increase in domestic production has seen the United States become less dependent on foreign oil. Imported oil prices averaged $46.89 per barrel in February, up from $42.59 in January.
Reporting by Lucia Mutikani Editing by Paul Simao