The Wall Street Journal reports,"the nation's exports declined 1.1% to $190.43 billion, while imports rose 0.4% to $232.73 billion, the Commerce Department said Thursday. As a result, the nation's trade gap widened 7.7% to $42.3 billion, more than the $38.6 billion gap forecast by economists. It was the largest trade deficit since September".
February's export decline followed a 0.6% gain in January. That suggests the surge in overseas sales that helped boost economic growth late last year was likely unsustainable. Growth in China is slowing while Europe's recovery remains fragile, tempering demand for U.S. exports.
The report triggered a spate of downward revisions to first-quarter growth estimates, which had already come down substantially due to economic disruptions caused by unusually cold and stormy weather.
Macroeconomic Advisers lowered its first-quarter growth forecast to a 0.9% annual growth rate from 1.4% previously. Morgan Stanley lowered its forecast to a 1.2% pace from 1.5%. Economists at Royal Bank of Scotland lowered their forecast to a 0.6% annual growth rate from 1.2% previously.
February's meager import growth provided new evidence of weak spending by U.S. consumers and businesses in the early part of the year. Domestic demand looks even weaker after adjusting the import data for inflation. Stripping out the effect of higher prices for petroleum and other products, imports fell slightly. Imports of capital goods, industrial supplies and petroleum products all declined. Imports of crude oil fell to $19.5 billion, the lowest level since late 2010, a reflection of expanded domestic energy production.
The U.S. economy trade data showed also some signs of strengthening in March. Recent data showed auto sales surging to one of the strongest rates in years after weakening in January and February, while manufacturing activity strengthened. According to a survey of purchasing managers by the Institute for Supply Management, March manufacturing output rebounded from multiyear lows in February, new orders rose and export orders picked up.
A bout of financial volatility in emerging markets early in the year has subsided, providing a more stable outlook that should help support U.S. exports.
But challenges remain for the global backdrop. China's growth engine is downshifting. Many economists believe Europe risks entering a period of deflation. And tensions with Russia over Ukraine could further harm the global economy.
U.S. exports to the European Union in February were down 2.5% from January, while exports to China were 4.6% lower.
"The recovery is taking hold, but is too slow," Christine Lagarde, managing director of the International Monetary Fund, said in a speech Wednesday. "Unless countries come together to take the right kind of policy measures, we could be facing years of slow and subpar growth."
