Date: Thursday, April 8th, 2021
Source: The Wall Street Journal
WASHINGTON—U.S. companies sent fewer goods overseas in February amid supply-chain disruptions, winter weather and continued pandemic-related business restrictions around the world.
The 2.6% seasonally adjusted decline put U.S. exports at $187.3 billion for the month, marking the first decline since May. That caused the trade deficit to widen 4.8% to $71.1 billion, the largest on record, the Commerce Department said Wednesday.
The decline in the exports from the prior month came as various industries, including energy, food, capital goods and automotive vehicles experienced sizable drops in shipments. As the global economy continues to recover from the pandemic’s impact, U.S. exporters have reported delays in shipments, citing congestion at ports, container shortages and steep increases in shipping rates.
Imports also declined, dropping 0.7% to $258.3 billion. U.S. purchases of foods and vehicles decreased as consumers pulled back on overall spending during the month.
Economists expect the U.S. trade deficit to remain high as its economy recovers faster than in other parts of the world, boosting imports in the coming months.
“With the U.S. economy set to explode while Europe and many of our trading partners still struggling, the trade deficit is likely to remain wide and in fact could increase further,” said Stephen Stanley, chief economist for Amherst Pierpont Securities. Import growth, he said, will outpace the gains in exports until other countries are able to reopen their economies more fully.
As shipments of goods retreated in February, trade in services also remained depressed amid continuing travel restrictions. Exports of services declined by $200 million to $56.1 billion in February from the prior month. Imports of services increased $300 million to $39.2 billion.
In a new global economic forecast released Tuesday, the International Monetary Fund revised its 2021 growth forecast for the U.S. to 6.4% from an earlier projection for 5.1%. That is a much faster pace than the projected growth of 4.4% for the euro area and 3.3% for Japan.
February’s drop in U.S. exports came after several months of higher overseas sales that followed a slump early in the pandemic. By January, the volume of exports had recovered nearly to pre-pandemic levels, aiding the growth of the U.S. economy along with strong domestic demand fueled by fiscal stimulus.
Economists in part attribute the decline in the overall exports in February to severe weather conditions that squeezed the shipments of goods through supply chains. The winter storm in mid-February, in particular, caused a widespread blackout in Texas, wreaking havoc on the state’s economy. Exports originating from Texas tumbled 21% in February from January.
In February, the U.S. deficit in trade in goods with China, the largest U.S. trading partner, narrowed to $24.6 billion from $26.3 billion in January. Exports to China fell 26.8% to $9.4 billion, while imports declined 13% to $34.0 billion. The IMF sees China’s economy growing 8.6% this year.
For months, U.S. exporters of products from pork to consumer goods have complained about delays in shipments. As nations partially emerged from pandemic-induced lockdowns, trade volumes picked up sharply while ports and logistics firms experienced pandemic-related restrictions and labor shortages.
The port congestion was caused by a surge in imports into the U.S. last year, as the country emerged from business restrictions in the spring and consumers, flush with stimulus money, purchased equipment for work from home and other items. Affected particularly severely are ports on the West Coast, the gateway to shipments to and from China and other Asian countries.
“Trade flows will pick up further as the global economy reopens,” Rubeela Farooqi, chief U.S. economist for High Frequency Economics wrote in a research note. “However, in the near term stretched supply chains and divergent growth patterns will likely be constraints.”
The trade impact created from the Ever Given container ship, which was stuck in the Suez Canal in late March, isn’t reflected in the February trade data.