WASHINGTON: The US trade deficit plunged in February as exports fell but imports dropped even more. The narrower gap could give a slight if temporary boost to US economic growth, which has flagged in recent months.
The Commerce Department said that the deficit the amount by which the value of US imports exceeds the value of exports plummeted 16.9 percent to $35.4 billion from $42.7 billion in January.
The sharp decline reflected a $10.2 billion drop in imports since January to $221.7 billion, likely due to cheaper oil prices and a since-resolved West Coast ports dispute that interrupted the flow of 20 percent of the nation’s imports. The dispute led to sharp declines in imported goods from China and Japan, causing the trade deficit with both countries to fall.
Exports tumbled by a smaller sum, slipping $3 billion to $186.2 billion. They fell because a strengthening dollar has made American-made goods more expensive abroad. The dollar’s rising value has curbed expansion at U.S. factories, according to an index released Wednesday the by Institute for Supply Management, a trade group of purchasing managers.
As a result, analysts say exports could decline further in coming months and likely weigh on the U.S. economy.
“Although the decline in the February deficit is good news for first-quarter growth, trade is likely to be a drag on the U.S. economy in 2015,” said Gus Faucher, senior economist at PNC Financial Services.
The trade deficit has fallen 3.2 percent compared with the same period last year. The domestic energy boom has kept the deficit in check. Not only has the U.S. reduced its dependence on foreign oil, but the falling prices have further limited the cash value of imported petroleum.
February petroleum imports totaled $16.3 billion, the lowest since September 2004.
However, the number of rigs exploring for oil and natural gas in the U.S. declined by 20 this week to 1,028 amid slumping oil prices, reports oilfield services company Baker Hughes Inc. The company said Thursday that 802 rigs were seeking oil and 222 exploring for natural gas. Four were listed as miscellaneous. A year ago, 1,818 rigs were active.
