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International Trade  
Released On 4/13/2010 8:30:00 AM For Feb, 2010
PriorConsensusConsensus RangeActual
Trade Balance Level$-37.3 B$-39.0 B$-40.5 B to $-36.0 B$-39.7 B

Today's trade report suggests that businesses are a little more optimistic about domestic demand. The U.S. trade gap widened in February on both oil and non-oil imports. The trade deficit for February expanded to $39.7 billion from a revised $37.0 billion the month before. February's gap came in a little larger than the market forecast for a $39.0 billion shortfall. Exports rebounded 0.2 percent while imports made a 1.7 percent comeback.

The worsening in the trade deficit was led by the nonpetroleum balance which widened to $27.2 billion from $25.6 billion in January. The petroleum deficit came in at $22.9 billion, compared to $22.5 billion in January.

The source of the gain in nonpetroleum goods should give comfort to those worrying about business confidence in the consumer sector. The boost in imports primarily was the result of a $1.1 billion jump in consumer goods, followed by a $1.0 billion gain in industrial supplies (largely oil). But imports of capital goods excluding autos posted a moderate gain of $0.4 billion. Overall, businesses appear to be in a restocking mood-which is favorable to the economy.

Exports were up only marginally with major components mixed. Capital goods excluding autos were up $0.4 billion in January despite a $0.8 billion drop in the aircraft component. The food, feeds & beverage component showed the biggest decline, dipping $0.5 billion. Taking into account the fall in civilian aircraft exports, overall exports were good.

On a year-on-year basis, growth in overall exports of goods and services in February slipped to 14.3 percent from 15.3 percent in January. Meanwhile import growth jumped to 23.3 percent in February from 13.7 percent the month before.

On the news, markets were little changed.

Consensus Outlook
The U.S. international trade gap unexpectedly shrank in January despite higher oil prices, falling to $37.3 billion from a revised $39.9 billion in December. Exports slipped 0.3 percent but imports fell a sharper 1.7 percent. The improvement in the trade deficit was about evenly split between the petroleum and nonpetroleum balances. The petroleum deficit came in at $22.7 billion, down from $23.6 billion in December as the number of barrels imported fell significantly. The nonpetroleum gap narrowed to $25.4 billion from $26.9 billion in December. Looking ahead, it may seem like ancient history but oil prices actually dipped in February on a seasonally adjusted basis and this could keep imports soft. On the other hand, consumer spending and business investment in equipment have picked up and we could see a boost in imports in these categories. The direction of the trade deficit for now, however, may not be as important to the equity and bond markets as to whether both foreign and domestic demand are picking up-i.e., both exports and imports gaining.

International trade is composed of merchandise (tangible goods) and services. It is available nationally by export, import and trade balance. Merchandise trade is available by export, import and trade balance for six principal end-use commodity categories and for more than one hundred principal Standard International Trade Classification (SITC) system commodity groupings. Data are also available for 48 countries and 7 geographic regions. Detailed information is reported on oil and motor vehicle imports. Services trade is available by export, import and trade balance for seven principal end-use categories.  Why Investors Care
Exports grow when foreign economies are strong. The weaker the foreign exchange value of the dollar, the less expensive goods and services are to foreigners, and this also helps spurt export activity. Imports grow when U.S. economic growth is robust. Imports are also spurred by a strong foreign exchange value of the dollar.
Data Source: Haver Analytics
The international trade balance has posted a deficit almost continuously since the 1980s. Any trade deficit is a drag on U.S. GDP growth, but a smaller deficit adds to growth, while a larger deficit decreases GDP growth.
Data Source: Haver Analytics

2010 Release Schedule
Released On: 1/122/103/114/135/126/107/138/119/910/1411/1012/10
Release For: NovDecJanFebMarAprMayJunJulAugSepOct

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