Source: Economics Group of Wells Fargo Bank, N.A.
Summary
Exports rose by the most in a year in February, while imports saw its second fastest gain in two. The solid outturn caused a modest widening in the U.S. trade deficit and suggests net exports will be a drag on U.S. real GDP growth in the first quarter.
Trade Flows Pop and Cause Deficit to Widen for Third Straight Month
International trade flows ripped higher in February with exports registering the largest gain in a year and imports seeing the second largest pickup in two years. U.S. exports advanced $5.8 billion in February, while imports shot $7.1 billion higher. The larger gain in imports caused the U.S. trade deficit to widen by $1.3 billion to a balance of -$68.9 billion. February marks the third consecutive month, or the fifth time in six months, that the trade balance has widened, a somewhat different pattern than the sharp narrowing we saw throughout 2022 and in the first half of last year (chart).
Trade flows were fairly broad based with auto exports the only major end-use category to register a decline (chart), as indicated by the advanced merchandise trade data release last week. Elsewhere, capital goods exports picked up thanks in large part to a bounce back in civilian aircraft shipments. On the import side, consumer goods rebounded in February, rising 2.6% over the month after slipping 1.8% in January. Imports of cell phones, furniture and apparel helped lift the overall category.