The international trade balance measures the difference between imports and exports of both tangible goods and services. Imports may act as a drag on domestic growth and they may also increase competitive pressures on domestic producers. Exports boost domestic production. Why Investors Care
| Released on 4/10/08 For Feb 2008 | ||||||||||||
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Highlights
The U.S. trade balance in February surprisingly worsened and sharply, indicating that the first quarter is weaker than believed. The overall U.S. trade gap grew to $62.3 billion from a revised $59.0 billion shortfall in January and was wider than the consensus forecast for a $57.5 billion figure. For the latest month, exports rose 2.0 percent while imports jumped 3.1 percent.
Also unexpectedly, the oil gap narrowed while the nonoil gap expanded sizably. The petroleum gap shrank to $32.5 billion from $35.3 billion in January. This deficit fell even though the price per barrel rose to a record $84.76 from $84.09 in January. The nonoil trade gap widened to $37.8 billion from $32.5 billion the month before. The biggest jump in imports was in automotive and consumer goods - where demand is soft. Capital goods imports rose only modestly. Export strength was in industrial supplies and foods, feeds & beverages.
Year-on-year, overall exports were up 20.8 percent in January while imports were up 16.4 percent.
February's trade report will lower first quarter GDP estimates and may well be what tips the numbers into negative territory. The jump in imports in February, however, will weigh on imports in coming months. Consumer spending is weak and businesses cannot justify importing at such high levels for automotive and consumer goods. This morning, bond yields rose on the news but also on a drop in initial unemployment claims.
The U.S. international trade gap has been improving outside of oil and has been the linchpin for strength in manufacturing. The overall U.S. trade gap in January was nudged up by higher oil prices to $58.2 billion from a revised $57.9 billion gap in December. Importantly, the nonoil gap shrank notably, helped not just by higher exports but also by lower nonoil imports. The nonoil trade gap continued its recent narrowing trend, slipping to $32.1 billion in January from $34.8 billion the month before. The petroleum balance, however, did worsen on higher oil prices, growing to $35.1 billion from $31.4 billion in December. With the continued weakness in the dollar and with oil prices continuing to rise, these trends are likely to continue - the nonoil gap is likely to shrink while the oil gap will probably widen.
International trade balance Consensus Forecast for February 08: -$57.5 billion
Range: -$60.0 billion to -55.7 billion
![[Chart]](chart.gif)
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Exports grow when foreign economies are strong. The weaker the foreign exchange value of the dollar, the less expensive goods and services are to foreigners, and this also helps spurt export activity. Imports grow when U.S. economic growth is robust. Imports are also spurred by a strong foreign exchange value of the dollar. |
![[Chart]](chart_1.gif)
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The international trade balance has posted a deficit almost continuously since the 1980s. Any trade deficit is a drag on U.S. GDP growth, but a smaller deficit adds to growth, while a larger deficit decreases GDP growth. |
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