U.S. Trade Deficit Falls Sharply in February

An early look at U.S. trade patterns in February shows a nearly 6% drop in the nation’s trade deficit, reversing a big increase in the prior month.

The trade gap in goods—services are excluded—fell to $64.8 billion in February from $68.8 billion in January, the government said Tuesday in its advanced report. The full report will be released next week.

The U.S. trade deficit often gyrates early in the new year depending on the date of the Chinese lunar new year, a long but annually shifting holiday during which must of the country’s business shuts down. The U.S. has a bigger trade deficit with China than any other country, by far.

Wholesale inventories, meanwhile, jumped 0.4% in February and retail inventories also rose 0.4%, according to advanced data. The government issues the advanced data to make it easier to estimate gross domestic product.

The decline in the trade deficit and higher inventories could give a boost to gross domestic product in the first quarter.

The government will unveil overall trade numbers early next week, but the size of the trade deficit is mostly tied to changes in exports and imports of goods. Trade patterns involving services such as financial advice or help-desk support rarely change much from month to month.

The government reported last month that the U.S. trade deficit in January totaled $48.5 billion.

MarketWatch

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Dean Popplewell

Dean Popplewell

Vice-President of Market Analysis at MarketPulse
Dean Popplewell has nearly two decades of experience trading currencies and fixed income instruments. He has a deep understanding of market fundamentals and the impact of global events on capital markets. He is respected among professional traders for his skilled analysis and career history as global head of trading for firms such as Scotia Capital and BMO Nesbitt Burns. Since joining OANDA in 2006, Dean has played an instrumental role in driving awareness of the forex market as an emerging asset class for retail investors, as well as providing expert counsel to a number of internal teams on how to best serve clients and industry stakeholders.
Dean Popplewell
Dean Popplewell

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