MercoPress. South Atlantic News Agency

US February trade deficit smallest since November 1999

The US trade deficit has narrowed to a new-year low in February, the seventh month in a row it has shrunk. The difference between what the US exports and imports, narrowed by 28% to 26.3 billion from January's revised 36.2 billion, becoming the smallest gap since November 1999.

Economists, who had expected the deficit to widen slightly in February, said the smaller imbalance was one of many recent indicators signalling that the steep plunge in US economic activity may be levelling off.

Some said the better-than-expected trade performance, along with stronger consumer spending, could lead to a decline in the overall economy of less than 5% in the first quarter which would be an improvement from the 6.3% plunge in the fourth quarter GDP.

Stronger sales for consumer goods — including pharmaceutical products, autos, food and beverages — led the strength in exports, which posted the first increase after six straight declines. But analysts cautioned against reading too much into the gain, which they said likely was a blip given sustained weakness in the global economy.

The politically sensitive deficit with China dropped 31% to 18.9 billion USD in February, but remains the largest trade gap with any country. US deficit with Japan fell to 2.2 billion, the lowest level since December 1984 and with Canada, the US biggest trading partner, dropped to 1.82 billion USD, the lowest level since December 1998.

For the first two months of this year, the deficit is running at an annual rate of 373 billion, about half of the 681.1 billion imbalance recorded in 2009, according to the Commerce Department.

For February, imports of goods and services fell 5.1% to 152.7 billion, the seventh consecutive monthly drop. A 16.3% plunge in imports of crude oil to 10 billion, the smallest monthly total since April 2004, led the overall decline. Average price of a barrel of crude fell to 39.22 USD.

Stronger sales of farm products, manufactured goods and autos in February helped offset a big drop in shipments of commercial aircraft. Big exporters such as Boeing Co. and Caterpillar Inc. have been forced to slash jobs because of the weak global economy. More than 75% of Boeing's orders last year came from outside North America while 60% of Caterpillar's heavy machinery sales are overseas.