U.S. Trade Deficit Expanded To $61.04 Billion in February

Wall Street Journal 12apr2005

Soaring energy costs and a flood of textile imports from China helped push the U.S. trade deficit to a record monthly high in February even as exports climbed and the dollar remained weak.

The Commerce Department said the U.S. deficit in international trade of goods and services grew 4.3% to $61.04 billion in February from a revised $58.5 billion in January. The shortfall was 2.7% higher than the previous all-time high of $59.42 billion posted in November. Exports and imports both climbed, but imports grew faster. Imports rose 1.6% to $161.52 billion, while U.S. exports rose 0.1% to $100.48 billion.

"I suspect that someday the trade deficit will start narrowing but that day has yet to come and may not for a while," said Joel L. Naroff of Naroff Economic Advisors.

For the first two months of this year, the trade deficit is running at an annual rate of $717.2 billion, a full $100 billion above the record imbalance of $617.1 billion set for all of 2004. Economists say that the widening trade shortfall is likely to take a bite out of first-quarter economic growth.

Imports of textiles and clothing from China rose by 9.8% even though America's overall trade gap with China actually narrowed to $13.9 billion, down by 9.2% from a January deficit of $15.3 billion. The improvement reflected an increase in U.S. exports to China and declines in other import categories outside of textiles.

The Bush administration, at the urging of U.S. textile and clothing manufacturers, has begun investigations into whether to re-impose quotas on Chinese imports of various products to protect the domestic industry from market disruptions following the removal of global quotas that had restricted shipments to the U.S. for more than three decades.

Energy costs were another significant drag on the trade balance. Though the volume of crude-oil imports fell to 296.9 million barrels from 322.8 million in January, the average price of a barrel of crude rose $1.50 to $36.85. The U.S. spent $14.95 billion on imported energy-related products in February, down from $15.23 billion in January.

At the same time, U.S. consumers continued to show a voracious appetite for foreign-made goods. Imports of pharmaceuticals, clothes, toys and art rose $675 million, while auto and related parts imports rose $152 million.

Peter Morici, a professor at the University of Maryland's Robert H. Smith School of Business, said Americans continue to buy foreign cars in large numbers. "Higher rebates and dealer incentives have done much to bolster Japanese car sales," he said. "Korean auto makers are selling an increasing range of good quality vehicles at lower prices that undercut Ford and GM compact and mid-sized sedans and SUVs."

Exports of industrial goods rose $505 million, led by fuel oil, other petroleum products and plastics. Auto and auto-parts exports dropped $259 million, and food exports were down $44 million.

Deficits with major trading partners were mixed in February, Commerce said. The trade gap with Japan rose to $6.87 billion from $6.21 billion in January. The trade gap with the euro area increased to $6.52 billion from $6.11 billion the previous month. The deficit with NAFTA partners rose by $266 million, reflecting a rise in imports from Mexico that offset a decline from Canada.

U.S. Census Bureau
U.S. Bureau of Economic Analysis
NEWS
U.S. Department of Commerce • Washington, D.C. 20230

For information on goods contact: U.S. Census Bureau:
Nick Orsini (301) 763-6959 Vanessa Ware (301) 763-2311
For information on services contact:
U.S. Bureau of Economic Analysis:
Technical: Christopher Bach (202) 606-9545 Media: Ralph Stewart (202) 606-9690

CB05-50, BEA05-14, FT-900 (05-02)
U.S. INTERNATIONAL TRADE IN GOODS AND SERVICES
February 2005

The U.S. Census Bureau and the U.S. Bureau of Economic Analysis, through the Department of Commerce, announced today that total February exports of $100.5 billion and imports of $161.5 billion resulted in a goods and services deficit of $61.0 billion, $2.5 billion more than the $58.5 billion in January, revised. February exports were $0.1 billion more than January exports of $100.4 billion. February imports were $2.6 billion more than January imports of $158.9 billion.

In February, the goods deficit increased $2.3 billion from January to $64.7 billion, and the services surplus decreased $0.3 billion to $3.7 billion. Exports of goods increased $0.1 billion to $71.2 billion, and imports of goods increased $2.3 billion to $135.9 billion. Exports of services were virtually unchanged at $29.3 billion, and imports of services increased $0.2 billion to $25.6 billion.

In February, the goods and services deficit was up $15.2 billion from February 2004. Exports were up $8.1 billion, or 8.7 percent, and imports were up $23.2 billion, or 16.8 percent.

The January to February change in exports of goods reflected increases in industrial supplies and materials ($0.5 billion) and consumer goods ($0.3 billion). Decreases occurredin capital goods ($0.4 billion) and automotive vehicles, parts, and engines ($0.3 billion). Foods, feeds, and beverages and other goods were virtually unchanged.

The January to February change in imports of goods reflected increases in industrial supplies and materials ($2.3 billion); consumer goods ($0.7 billion); and automotive vehicles, parts, and engines ($0.2 billion). A decrease occurred in capital goods ($0.8 billion). Foods, feeds, and beverages and other goods were virtually unchanged.

NOTE: Total goods data are reported on a Balance of Payments basis; commodity and country detail data for goods are on a Census basis. For information on data sources and definitions, see the information section on page 26 of this release, or at www.census.gov/ft900  or www.bea.gov/bea/di/home/trade.htm. The next release is May 11, 2005.

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The February 2004 to February 2005 change in exports of goods reflected increases in industrial supplies and materials ($2.8 billion); consumer goods ($1.4 billion); capital goods ($0.9 billion); and automotive vehicles, parts, and engines ($0.9 billion). Foods, feeds, and beverages and other goods were virtually unchanged.

The February 2004 to February 2005 change in imports of goods reflected increases in industrial supplies and materials ($9.3 billion); consumer goods ($6.1 billion); capital goods ($3.7 billion); automotive vehicles, parts, and engines ($1.1 billion); foods, feeds, and beverages ($0.5 billion); and other goods ($0.3 billion).

Services exports were virtually unchanged from January to February. A decrease in travel was partly offset by an increase in transfers under U.S. military sales contracts. Changes in the other categories of services exports were small.

Services imports increased $0.2 billion from January to February. Most of the increase was accounted for by increases in other transportation (which includes freight and port services) and other private services (which includes items such as business, professional, and technical services, insurance services, and financial services). Changes in the other categories of services imports were small.

From February 2004 to February 2005, services exports increased $1.9 billion. The largest increases were in other private services ($0.8 billion), royalties and license fees ($0.4 billion), and travel ($0.3 billion).

From February 2004 to February 2005, services imports increased $2.3 billion. The largest increases were in other transportation ($0.9 billion) and other private services ($0.6 billion).

For the three months ending in February, exports of goods and services averaged $100.4 billion, while imports of goods and services averaged $158.9 billion, resulting in an average trade deficit of $58.4 billion. For the three months ending in January, the average trade deficit was $57.9 billion, reflecting average exports of $99.4 billion and average imports of $157.3 billion.

The February figures showed surpluses, in billions of dollars, with Australia $0.7 (for January $0.6), Hong Kong $0.7 ($0.4), Singapore $0.4 ($0.3), and Egypt $0.1 ($0.2). Deficits were recorded, in billions of dollars, with China $13.9 ($15.3), Europe $10.1 ($9.5), the European Union $8.5 ($8.1), Japan $6.9 ($6.2), OPEC $6.3 ($6.1), Canada $5.8 ($6.3), Mexico $3.7 ($2.9), Korea $1.2 ($1.9), Taiwan $1.0 ($1.2), and Brazil $0.6 ($0.9).

Advanced technology products (ATP) exports were $14.9 billion in February and imports were $18.3 billion, resulting in a deficit of $3.4 billion. February exports were $0.3 billion less than the $15.2 billion in January, while imports were $0.5 billion less than the $18.8 billion in January.

Goods carry-over in February was $0.4 billion (0.6 percent) for exports and $1.1 billion (0.9 percent) for imports. For January, revised export carry-over was $0.2 billion (0.2 percent), revised down from $0.4 billion (0.6 percent). For January, revised import carry-over was $0.2 billion (0.1 percent), revised down from $1.1 billion (0.9 percent).

Services exports for January were revised down $0.2 billion to $29.3 billion; the revision was mostly accounted for by a downward revision in travel. Services imports for January were revised down $0.2 billion to $25.4 billion; the revision was mostly accounted for by a downward revision in travel.