The US trade deficit fell in February to its lowest point since 1999, because Americans are curbing their purchases of imports far faster than foreigners are trimming their purchases of US goods and services.
Indeed, US exports increased slightly by $2.0 billion in February from January.
Imports from January to February dropped by $8.2 billion, leading to a dramatic 28.3 percent drop in America's trade deficit, the Commerce Department reported Thursday morning. In percentage terms, the drop marked the largest one-month decline since 1996, on a seasonally adjusted basis, and represents a 61.2 percent drop from the peak in mid-2006.
Fewer materials imports
Accounting for most of the import decline was a $3.6 billion decrease in industrial supplies and materials and a $1.9 billion fall in capital goods. In a heartening sign for the auto industry, imports of vehicles, parts, and engines fell $0.9 billion in February while exports of those goods actually rose slightly by $0.5 billion.
Exports and imports can vary wildly from month-to-month, so February's numbers don't necessarily represent a decisive turnaround. But even looking at longer time periods, the trend in America's trade picture looks more positive than other major nations'.
Japan's trade surplus, for example, has fallen 80 percent from a year ago, Japan's Ministry of Finance reported Wednesday, mostly because its exports have fallen far faster than its imports,. The euro area – the 16 European nations using the currency – has seen a more muted version of the same trend: In January, exports had fallen 24 percent from a year earlier while imports were down 23 percent.
In the US, by contrast, exports in February were down only 16.9 percent from a year ago while imports plunged 28.8 percent.