The US trade deficit widens at the beginning of the year Ship’s crew

By Reade Pickert (Bloomberg) —

The US trade deficit widened to its highest level in three months earlier in the year, on the back of a surge in merchandise imports.

The trade gap in goods and services rose 1.6% mom to $68.3 billion in January, Commerce Department data showed on Wednesday. The figures are not adjusted for inflation. The median estimate in a Bloomberg poll of economists revealed a gap of $68.7 billion.

The value of imports rose 3% to $325.8 billion, while exports rose to $257.5 billion.

A resilient domestic economy helped bolster demand for imports, while a month-long decline in the dollar likely helped boost overseas purchases of American-made goods.

Adjusted for inflation, exports of consumer goods and motor vehicles and parts climbed to a record high, while the real value of overseas capital goods shipments hit the highest level since March 2019.

Additionally, less shipping congestion and a normalization of global supply chains in general have helped ease trade between the U.S. and other countries.

“The rebound in trade flows earlier in the year signals that the economy remains strong, but we do not expect the strength to continue in the coming months,” Oxford Economics economists Matthew Martin and Ryan Sweet said in a note.

Ahead of Wednesday’s report, the Federal Reserve Bank of Atlanta’s GDPNow estimate, net exports would rise by about 0.6 percentage points on growth in the first quarter. That would be slightly more than the trade added in the fourth quarter.

While the nominal goods trade deficit narrowed slightly, the goods deficit widened to $101.8 billion in January on an inflation-adjusted basis, also the largest in three months.

deep ditch

  • Price-adjusted US goods exports rose again for the first time since August. The gain was broad-based and included gains in pharmaceuticals and other consumer goods, capital goods and autos.
  • Travel exports – or spending by visitors to the US – fell to $12.1 billion
  • Travel imports, a measure of Americans traveling abroad, rose to a record $11.9 billion
  • The US trade deficit in goods with China widened to $25.2 billion on an unadjusted basis from $23.5 billion

–With support from Jordan Yadoo and Ana Monteiro.

© 2023 Bloomberg LP

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