U.S. trade deficit narrows 8.3%
West Coast dock tie-up, stronger dollar tightening gap
WASHINGTON — The U.S. trade deficit narrowed in January from a more than two-year high after port disputes on the West Coast restrained imports and a strengthening dollar slowed overseas demand.
The Commerce Department said Friday that the deficit fell 8.3 percent to $41.8 billion in January from $45.6 billion in December. The shrinking trade gap reflected a drop in exports, which fell $5.6 billion to $189.4 billion. Imports fell $9.4 billion to $231.1 billion.
The median forecast in a Bloomberg survey of economists called for a $41.1 billion deficit.
Much of the dip in imports likely came from lower oil prices and a labor dispute that disrupted shipping at West Coast ports. At the same time, the strong dollar that has made Americanmade goods less affordable abroad is weighing down exports.
The distortion in the January data is “not representative of the future trend,” David Sloan, senior economist at 4Cast Inc. in New York, said before the report. “The U.S. is increasingly becoming the main global motor of growth, though we may lose a little momentum later into the year, particularly if the Fed starts tightening.”
The trade deficit reached $505 billion last year, up 6 percent from the 2013 deficit of $476.4 billion. It was the largest imbalance since 2012. Economists expect the deficit to widen further in 2015 as stable growth in the United States drives imports and tepid growth overseas paired with a strong dollar depress exports.
The politically sensitive deficit with China was $29.3 billion in January, down from $30.4 billion in December. Still, that constant imbalance has created pressure on Congress and the Obama administration to take tougher actions against what critics see as China’s unfair trade practices. U.S. manufacturers say that China is manipulating its currency to keep it artificially low against the dollar, which benefits Chinese exporters while creating a barrier for U.S goods.
Yet a domestic energy boom has kept the deficit in check.
U.S. oil production made possible by fracking has reduced dependence on foreign oil. Between December and January, petroleum imports fell 23 percent to $17.7 billion.
Crude has lost half of its value since June as U.S. producers pumped oil at the fastest pace in three decades. Saudi Arabia has raised its pricing to Asia, signaling demand is improving after the nation led an Organization of Petroluem Exporting Countries decision in November to maintain output and defend market share against shale producers.
OPEC pumped 30.6 million barrels a day in February, an increase of 163,000 a day that was led by gains from Saudi Arabia, the world’s biggest crude exporter. It was the ninth straight month that the 12-member group has produced more than its collective target of 30 million barrels a day, the data show.