U.S. Trade Deficit Narrows Far More than Expected

Year-Over-Year, Trade Deficit for Goods and Services Declined $1.9 billion, or 3.7 Percent

The U.S. trade deficit narrowed far more than expected in January, closing $8.8 billion to $51.1 billion and beating the consensus forecast.

The consensus forecast for the report released by U.S. Census Bureau and the U.S. Bureau of Economic Analysis (BEA) was $-57.3 billion, ranging from $59.0 billion to $55.0 billion.

In January, exports came in at $207.3 billion, $1.9 billion more than in December. Imports were $258.5 billion, $6.8 billion less than December.

The overall narrowing in the trade deficit for goods and services was fueled by a $8.2 billion decline in the goods deficit to $73.3 billion and an increase in the services surplus of $0.5 billion to $22.1 billion.

Year-over-year, the goods and services deficit decreased $1.9 billion, or 3.7%, from January 2018. Exports increased $6.1 billion or 3.0%. Imports increased $4.1 billion or 1.6%.

The average trade deficit for goods and services fell $1.8 billion to $53.9 billion for the three months ending January. Average exports declined $1.1 billion to $207.4 billion, while average imports fell $2.9 billion to $261.2 billion.

Year-over-year, the three-month average goods and services deficit gained $2.5 billion.

Goods By Selected Countries and Areas

The deficit with China decreased $5.5 billion to $33.2 billion in January. Exports decreased $0.2 billion to $7.5 billion and imports decreased $5.7 billion to $40.8 billion.

Goods and Services by Selected Countries and Areas

For the fourth quarter (Q4), the U.S. held trade surpluses in the billions of dollars with South and Central America ($21.2), Hong Kong ($8.1), Brazil ($7.4), United Kingdom ($4.9), Singapore ($4.8), Canada ($1.5), and OPEC ($0.6).

Deficits were posted in the billions of dollars with China ($102.6), the European Union ($28.7), Mexico ($21.4), Germany ($16.3), Japan ($14.1), Italy ($9.4), India ($5.8), Taiwan ($3.9), France ($3.0), Saudi Arabia ($2.7), and South Korea ($1.8).

The politically-sensitive trade deficit with China widened $6.3 billion to $102.6 billion in Q4. Exports fell $8.2 billion to $37.2 billion, as did imports by $1.9 billion to $139.8 billion.

The balance with Canada shifted from a deficit of $3.4 billion to a surplus of $1.5 billion in Q4. Exports decreased $0.8 billion to $89.1 billion and imports decreased $5.8 billion to $87.6 billion.