Preview: Due April 2 - U.S. February Trade Balance - Volatility continuing, deficit to bounce after January decline
We expect the US trade balance to continue to show volatility in February, with a deficit of $68.0bn, up from $54.5bn in January but below December’s $72.9bn. The deficit would remain slightly below where trend was running in 2024, around $75.0bn per month, before a pre-tariff surge and a post-tariff plunge.
The volatility in recent trade data has been most pronounced in a small number of components. Exports bounced sharply in January led by precious metals and non-monetary gold, both of which look unsustainably high though an immediate return to trend is far from assured. Also strong in January were exports of aircraft, which Boeing data suggests will be less so in February, and computers, where trend is strong but January strength will be difficult to sustain. Pharmaceutical preparations may however pick up from January weakness. Overall we expect goods export volumes to fall by 4.0% after a 7.4% January increase but price gains will restrict the nominal decline in goods exports to 2.5%.
Imports in January saw slippage in nonmonetary gold, though modest in comparison to the rise in exports, together with strength in computers and weakness in pharmaceutical preparations that exceeded the moves seen from exports in those two sectors. Overall we expect goods import volumes to increase by 1.2% after a 1.3% January decline, with price gains lifting the nominal gain to 2.5%.
We expect a decline in the services surplus due to service imports rising by 3.0% on TV fees for the Winter Olympics, while service exports see a moderate increase of 0.6%. That would leave overall exports down by 1.4% after a 5.5% January increase and overall imports up by 2.6% after a 0.7% January decline.