US trade gap stays close to record as services surplus narrows

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(April 5): The US trade deficit held close to a record in February as the merchandise shortfall shrank and the surplus in services declined, partly reflecting the impact of broadcast rights for the Olympics.

The February gap in goods and services trade was little changed at US$89.2 billion after a record shortfall in January, Commerce Department data showed Tuesday. The median estimate in a Bloomberg survey of economists called for a US$88.5 billion February shortfall. The figures aren’t adjusted for prices. 

The value of imports of goods and services rose 1.3% in February to a record US$317.8 billion and exports climbed 1.8% to US$228.6 billion.

Services imports increased by US$2.4 billion to a record US$51.6 billion, with about half of the rise coming from the biggest monthly increase in charges for use of intellectual property since 2016. That probably reflects a temporary boost from rights fees to broadcast the winter Olympics, consistent with such spikes in previous years.

Meantime, goods imports also rose, reflecting an increase in industrial supplies such as crude oil and chemicals that more than offset a drop in automobiles. 

Looking ahead, the ripple effects of Russia’s invasion of Ukraine and a potential weakening in European demand for US goods and services may temper US export growth. China’s latest lockdown also highlights the persistence of supply chain challenges. 

On an inflation-adjusted basis, the February merchandise-trade deficit narrowed to US$116.3 billion from US$117.9 billion. While down from a record in January, the shortfall has grown since the end of last year, indicating net exports will subtract from economic growth in the first quarter. Less inventory accumulation is also seen subtracting from gross domestic product during the period.

The adjusted petroleum trade deficit grew to US$8.6 billion, the largest since September.

Digging Deeper

  • The merchandise-trade deficit narrowed to US$107.5 billion from a record
  • Travel exports -- or spending by visitors to the US -- rose to US$8.1 billion from US$6.9 billion
  • Travel imports, a measure of Americans traveling abroad, rose to US$6.4 billion from US$5.9 billion
  • The goods-trade deficit with Russia widened to US$2.1 billion from US$1.6 billion