The U.S. trade deficit climbed to the highest level in five months in February as demand for American exports fell while imports increased slightly.
The deficit increased to $42.3 billion, which was 7.7% above the January imbalance of $39.3 billion, the Commerce Department reported Thursday.
U.S. exports slipped 1.1% to $190.4 billion as sales of commercial aircraft, computers and farm goods fell. Imports edged up 0.4% to $232.7 billion, reflecting gains in imports of autos and clothing, which offset a drop in crude oil to the lowest level in more than three years.
A higher trade deficit acts as a drag on economic growth because it means that U.S. companies are making less overseas than their foreign competitors are earning in U.S. sales.
The wider February deficit prompted some economists to reduce their estimate for overall economic growth for the January-March quarter.
Economists at Macroeconomics said they had trimmed their tracking estimate for overall growth, as measured by the gross domestic product, to a 0.9% rate in the first quarter, down by one-half percentage point because of the larger trade deficit.
For the first two months of the year the trade deficit is running 4.5% below the same period in 2013, when the deficit dropped to $474.9 billion, 11.2% below the annual deficit in 2012.
Many economists expect the trade deficit will keep narrowing this year as exports, helped by a U.S. energy production boom, grow faster than imports. But analysts expect the improvement will be modest because they are also looking for imports to rise as a stronger U.S. economy and higher consumer spending attract more foreign goods.
A domestic energy boom has boosted exports and reduced America’s dependence on foreign oil. U.S. petroleum exports rose to an all-time high of $137.2 billion last year, up 11% from 2012. Energy imports fell 10.9% to $369.4 billion as domestic production took the place of some imports.
For February, energy exports dropped 10.2% to $11.1 billion while petroleum imports fell 2% to $31 billion. Crude oil imports fell to $19.5 billion, the lowest level since October 2010.
The deficit with China dropped a sharp 25.1% in February to $20.9 billion. But analysts are still looking for the trade gap with China, which has been the highest with any country, to top the record set in 2013.
Those record deficits have increased pressure on the Obama administration and Congress to take a tougher line on what critics see as unfair trade practices by China to gain trade advantages.