The US trade deficit fell in February to its lowest point in four months. American exports rose to an all-time high while imports dropped.
The narrower deficit could lead economists to upward revise their growth estimates for the January-March quarter.
The Commerce Department said on Thursday that the trade deficit decreased 12.4 per cent to $46 billion in February, down from $52.5 billion in January.
Exports edged up 0.1 per cent to a record $181.2 billion. US businesses sold more goods in Europe, China and other parts of the world. Imports dropped 2.7 per cent to $227.2 billion, after hitting a record high in January. Oil imports fell, as did imports of foreign cars and machinery.
A narrower trade deficit will weigh less on growth because it means businesses sold more American-made goods overseas while US consumers bought fewer foreign-made products. Most economists expect growth slowed in the January-March quarter to an annual rate of less than 2.5 per cent, down from three per cent at the end of last year. “February’s US trade data are better than expected and suggest that net trade wasn’t as large a drag on growth in the first quarter as previously looked likely,” said Paul Dales, senior US economist at Capital Economics.
The deficit with the 27-nation European Union dropped 30.2 per cent to $5.9 billion. US exports to the region rose 6.7 per cent. Europe represents about 20 per cent of America’s export market.
The US deficit with China fell 25.6 per cent in February to $19.4 billion, the lowest level since March 2011. For all of 2011, the deficit with China hit a record $295.5 billion, the highest deficit ever recorded with a single country.
Separately, the number of Americans filing for jobless aid hit a two-month high last week and more applications were received in the prior week than initially reported, suggesting a cooling in the labor market recovery.
Initial claims for state unemployment benefits increased 13,000 last week to a seasonally adjusted 380,000, the Labour Department said on Thursday, defying economists’ expectations for a drop to 355,000.