WASHINGTON (MarketWatch) - A sharp increase in imports pushed the U.S. trade deficit higher in February, and there were signs of stirring consumer demand which could bolster the economy in coming months, government data released Tuesday showed.
The trade deficit widened a seasonally adjusted 7.4% to $39.7 billion from $37.0 billion in January, as imports expanded at a much faster pace than exports, the Commerce Department said Tuesday.
The widening of the deficit in February was stronger than expected but fit the overall pattern laid out ahead of the report by analysts. Economists surveyed by MarketWatch had expected the deficit to widen to $38.5 billion.
The trade gap had widened sharply in November and December before reversing course in January. Economists now think the decline in imports in January was an aberration more related to winter weather.
The deficit between what the U.S. exports and what it imports remains well above the low point of a $25.76 billion deficit hit last May or even the $32.9 billion deficit from October.
Imports of consumer goods rose 3.1% in February. This may be a hint of stronger domestic demand.
The outlook for consumer demand is important at the moment because government stimulus that has fueled the economic recovery is expected to provide less thrust in coming quarters.
Imports of crude oil rose strongly in February but were only part of the story. Imports widened even when petroleum and petroleum prices were stripped out.
On the other hand, a worsening trade gap means that the sector will be a drag on growth in coming quarters.
Details
In February, both exports and imports increased, with imports rising at a faster pace.
Imports rose 1.7% to $182.9 billion.
Exports rose 0.2% to $143.2 billion, their highest level since October 2008. Strong growth in emerging markets has bolstered U.S. exports, economists said.
Imports of goods alone rose 3% to $182.9 billion. Imports of capital goods increased in February while imports of autos declined.
Meanwhile, exports of goods alone inched up 0.1% to $98.5 billion despite a sharp drop in civilian aircraft exports.
Excluding petroleum, the deficit widened 6.5% to $27.2 billion in February. This is the largest deficit since January 2009.
Excluding price changes, the overall trade deficit widened 3.7% to $42.5 billion in February.
The U.S. trade deficit with China widened to $16.5 billion in February, compared against $14.2 billion in the same month last year. The deficit in February was the smallest since last March and is down from $18.3 billion in January. Imports from China were the lowest since May 2009.
On Monday, President Barack Obama met with China's president Hu Jintao in Washington for an hour and a half to discuss trade, China's currency, and national security issues.
Analysts see clear signs that China is prepared to end its currency's peg to the dollar, a move strongly favored by the White House.
After the meeting, experts said that U.S. China relations appeared to be in relatively good shape.
But analysts warn that if the U.S. trade deficit continues to rise and China posts large trade surpluses it might lead to new sparks of conflict.
Over the weekend, China reported a trade deficit in March, the first monthly trade gap since 2004. Analysts are divided over whether this represents a new trend.
