US trade gap shrinks as global demand falls

The US trade deficit shrank in February as imports fell more than exports, according to a new government report that suggested a slowdown in global demand.

The monthly trade gap totalled $45.8bn (£28bn), down from an upwardly revised estimate of $47bn in January.

Analysts surveyed before the report had expected the deficit to narrow to $44.5bn, from the previously reported January tally of $46.3bn.

US exports, after rising in each of the previous five months, fell 1.4 per cent in February to $165.1bn. That was led by a $1bn drop in auto and auto parts exports, with smaller declines for other major categories. Services exports rose just enough to set a record.

US imports, which like exports have roared back from the depths of the global financial crisis in 2008 and 2009, fell a larger 1.7 per cent in February to $210.9bn.

Automotive imports fell $2.3bn, followed by a $2.1bn drop in capital goods. Imports of consumer goods rose $2.3bn in February.

The average price for imported oil rose for the fifth straight month in February to $87.17 per barrel, the highest since October 2008. But that was tempered by the lowest quantity of crude oil imports since February 1999.

The closely watched US trade deficit with China shrank 19 per cent in February to $18.8bn, as US imports from that country fell and US exports to the Asian manufacturing giant rose.

While Beijing could point to the smaller trade gap as a sign its economy was becoming less reliant on exports, the US trade deficit with China was still 21 per cent higher for the first two months of the year.

China's own trade figures released earlier this week showed that in the first quarter of 2011 it ran an overall trade deficit for the first time since 2004.