Trade Deficit Soars to Unexpected High of $15 Billion in Feb.
The nation’s trade deficit soared in February to $15.1 billion, far higher than had been expected, the Commerce Department announced in a report that could further hurt the dollar’s standing against other currencies.
The monthly deficit was the third-biggest on record, trailing only last July’s $16.05 billion and November’s $15.44 billion.
Americans imported $33.7 billion worth of merchandise during the month, up from $28.7 billion in January, as the deficit widened with each of the nation’s three major trading partners--Japan, Canada and Western Europe--the report said.
The February shortfall was up from a revised January deficit of $12.3 billion. The January figure had initially been reported as $14.8 billion.
Exports also increased, to $18.7 billion in February from $16.4 billion the month before.
The deficit with Japan was $5.1 billion in February, up from $4.3 billion in January.
Americans imported $4.1 billion worth of new automobiles in February, $1.7 billion of them from Japan and $1.1 billion from Canada.
New Reporting Procedures
The February report was issued two weeks later than usual, with the delay reflecting new procedures for reporting and revising the information that Commerce Department officials said would increase accuracy.
February’s trade deterioration included a 16.2% increase in imports of manufactured goods, to $25.8 billion.
Oil imports also rose in February, to $3.4 billion from $2.5 billion in January.
The magnitude of the February deficit surprised financial analysts, who had predicted that it would be in the neighborhood of $13 billion.
Economists have long awaited a marked improvement in trade accounts due to a weakening dollar. However, February’s report suggested that the turnaround has yet to occur.
Weaker Dollar
A weaker dollar should make imports more expensive and U.S. goods cheaper, and thus more competitive, overseas. This is expected eventually to ease trade imbalances.
Since it hit a peak 26 months ago, the dollar has fallen nearly 50% against the Japanese yen and nearly 40% against the West German mark.
“The February numbers represent a setback,” said Sara Johnson, an economist for Data Resources, an economic forecasting group in Lexington, Mass. “The dollar is now two years past its peak and we’re still waiting for some improvement.”
“It’s a deterioration, and although it’s not a return to the worst months, it suggests there’s no substantial improvement,” said Tom Megan of Evans Econometrics in Washington.
