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US trade deficit widens in February on strong imports

Published 05/04/2024, 12:32 am
Updated 05/04/2024, 12:39 am
© Reuters. Shipping containers, including one labelled "China Shipping" and another "Italia", are stacked at the Paul W. Conley Container Terminal in Boston, Massachusetts, U.S., May 9, 2018.   REUTERS/Brian Snyder/File Photo

WASHINGTON (Reuters) - The U.S. trade deficit widened for a second straight month in February as an increase in exports to a record high was offset by surging imports, suggesting trade could be a drag on economic growth in the first quarter.

The trade deficit increased 1.9% to $68.9 billion, the Commerce Department's Bureau of Economic Analysis said on Thursday. Data for January was revised slightly to show the trade gap rising to $67.6 billion instead of $67.4 billion as previously reported. Economists polled by Reuters had forecast the deficit little changed at $67.3 billion in February.

When adjusted for inflation, the goods trade deficit increased 1.2% to $87.0 billion in February.

Most of the imported goods likely ended up as inventories, which could offset the anticipated hit on gross domestic product from the widening trade gap.

Trade added 0.25 percentage point to the economy's 3.4% annualized growth rate in the fourth quarter after being neutral for two straight quarters. Growth estimates for the first quarter are currently as high as a 2.8% pace.

Exports jumped 2.3% to an all-time high of $263.0 billion. Goods exports accelerated 2.9% to $176.7 billion. There were increases in exports of industrial supplies and materials, which include crude oil. Food exports rose $1.7 billion, boosted by soybeans. Capital goods exports increased $1.5 billion to a record high $53.0 billion, amid a rise in civilian aircraft.

But exports of motor vehicles, parts and engines decreased $1.3 billion. Exports of services rose $0.8 billion to an all-time high of $86.4 billion, lifted by travel and transport.

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Imports advanced 2.2% to $331.9 billion in February, the highest level since October 2022. Goods imports shot up 1.8% to $268.1 billion. There were increases in imports of consumer goods, food as well as motor vehicles, parts and engines.

Services imports rose $2.4 billion to a record $63.8 billion.

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