WASHINGTON: The US trade deficit expanded slightly in February to the widest in four months as exports dropped more than imports, according to government data released on Wednesday.
The trade gap stood at $70.5 billion in February, up by $1.9 billion from January, said the Commerce Department, slightly more than analysts expected.
The overall deficit widened to a record last year, and spending has remained more resilient than expected despite multiple interest rate hikes by the Federal Reserve to cool stubborn inflation.
But analysts expect imports and exports to weaken as consumers pull back this year and the world’s biggest economy cools.
Exports slipped to $251.2 billion in February while imports dipped to $321.7 billion.
“Domestic demand continued to hold up better than demand overseas, leading to incremental increases to the deficit, though there are signs US consumers and businesses lost some momentum,” said Matthew Martin, US economist at Oxford Economics.
He added that trade is expected to “pose a drag on GDP growth this year” while weak foreign demand and a strong dollar will also weigh on exports.
Among categories, exports of industrial supplies and materials dropped along with that of consumer goods, the latest data showed.
The import of consumer items including cell phones and household products also fell, alongside automotive vehicles and parts.
“Last year, we had a big surge in imports at the start of the year because loads of retailers, wholesalers, found themselves with not enough inventory,” said Kieran Clancy, senior US economist at Pantheon Macroeconomics.
While businesses placed orders accordingly, demand shifted from goods to services, causing them to end up with a surplus of inventory that they had to run down later in the year, he added.
“What we’ve seen over the last two to three months is the trade deficit moved in a very narrow range,” he told AFP, adding that he expects this to continue.
Meanwhile, the US goods deficit with China picked up by $3.2 billion to $25.2 billion in February, Commerce Department data showed.
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