US trade deficit falls again, analysts not enthused
14 Mar 2009
The US trade deficit narrowed 9.7 per cent in January to its smallest since October 2002, as both imports and exports tumbled for the sixth consecutive month in the face of shrinking global demand, a US government report showed on Friday. However, the politically sensitive deficit with China widened.
The monthly trade gap shrunk to a seasonally adjusted $36 billion, down 9.7 per cent from $39.9 billion and below a Wall Street consensus estimate of $38.0 billion. The deficit has now narrowed for a record six consecutive months, the longest previous run being from April through August 2007.
While the improvement in the trade balance appeared positive at face value, analysts were quick to point out that the Commerce Department data reflected the troubles in economies around the world as well as lower oil prices, rather than a strengthening US economy.
Exports of goods and services from the US fell 5.7 per cent from December to the lowest since September 2006 and imports tumbled 6.7 per cent to their lowest level since March 2005.
"The narrowing reflects the ongoing economic downturn everywhere. US consumers are pulling back and that's resulting in fewer imports while exports are falling," a Moody's economist told Reuters.
Total world trade is expected to fall this year for the first time since 1982 as businesses and consumers cut back on spending. Earlier this week, China reported that its exports plunged 25.7 per cent in February from a year earlier, while imports declined 24.1 per cent (See: China's exports decline again in February; investments soar).
Exports dropped 5.7 per cent to $124.9 billion, led by autos and auto parts and other capital goods, such as aircraft and semiconductors.
On a year-to-year basis, US exports were down 16.4 per cent in January while imports were 22.8 per cent lower, the report showed. The monthly trade deficit has narrowed 39.1 per cent over the same period.
In a sign of the bleak conditions facing the world's automakers, both US imports and exports of autos and auto parts were the lowest since July 1998.
US exports of food, feeds and beverages were slightly higher in January, but other major categories such as consumer goods, capital goods and industrial supplies and material all declined.
On the import side, all major categories were lower, with another drop in monthly oil prices to $39.81 per barrel cutting the value of US crude oil imports to $11.9 billion, the lowest since February 2005.
The bilateral US trade deficit with China swelled 3.5 percent in January as exports to China fell much faster than imports from that country.
By region, in data not seasonally adjusted, the trade gap with Canada, the country's largest trading partner, continued to shrink, to $2.5 billion dollars, its weakest level since May 1999.
The deficit with Japan fell to its lowest level since January 1998, at $4.3 billion, and Japanese imports were the weakest since May 1993.
With the 16-nation eurozone, the US gap contracted a staggering 40.6 per cent in January from the previous month, to $3.4 billion. Trade volume dropped 18.4 per cent.
