The U.S. deficit in the trade of goods and services with the rest of the world narrowed in the second month of the year from a seven-month high on falling demand for imports, according to Bloomberg. On Tuesday, the Commerce Department reported that the U.S. trade gap shrank by 2.6% during February to $45.8 billion, which was higher than economists’ forecast for a drop to $44 billion before January was revised to $47 billion from the initial estimate of $46.3 billion. The previous month’s deficit was the highest since June on record exports and imports at a two-year high.
The latest report showed that imports dropped by 1.7% to $210.9 billion, which is the largest monthly drop since August 2008. Exports fell by 1.4% to $165.1 billion. Omair Sharif of RBS Securities forecast for “headwinds in the first half of the year, given the Japan situation,” but he added, “We do expect trade to pick back up.” Meanwhile, the Labor Department reported that the price of goods imported into the U.S. rose by 2.7% in March, which is the fastest rate since June 2009, led by surging energy and food costs.