Date: Thursday, March 9, 2023
Source: Wall Street Journal
WASHINGTON—U.S. trade with the rest of the world grew in January, adding to signs the global economy started the year on a surprisingly strong note.
Imports grew 3.0% to a seasonally adjusted $325.8 billion, reflecting increases in the shipments of automobiles and consumer goods such as cellphones, toys and sporting goods, the Commerce Department said Wednesday. Exports rose 3.4% to $257.5 billion, as the sale of pharmaceutical drugs and other consumer goods increased. Trade data isn’t adjusted for inflation.
As a result, the trade gap in goods and services expanded 1.6% in January to $68.3 billion from December’s revised deficit of $67.2 billion.
The trade data comes against the backdrop of renewed signs of strength for the U.S. and global economies.
In the U.S., consumers continue to spend more amid strong job growth. The U.S. retail sales rose 3% in January, the largest monthly gain in nearly two years, as shoppers spent more on vehicles, furniture, clothing and dining out. The unemployment rate fell to a 53-year low.
Europe has also started the year with vigor, propelled by lower energy prices. China emerged from Covid-19 lockdowns, though trade in and out of China showed sizable declines in the first two months of the year.
Many economists expect that actions of the Federal Reserve and other central banks will cool trade activities in the coming months as economic growth begins to lose steam.
Imports of services increased in January as more Americans traveled overseas. Services exports declined amid decreased spending on transportation.
Goods exports to China fell 5% in January to $13.1 billion, despite the easing of pandemic lockdowns in the country. China’s reopening hasn’t translated into increased demand for foreign goods, at least for now, economists say. Country-level data aren’t adjusted for seasonality.
Although imports of goods from China ticked up slightly in January, on a 12-month basis they fell to $527.2 billion—the fourth monthly decrease in a row. That softening reverses a steady growth that began in September 2020.
January’s trade data showed that China accounted for 16.2% of U.S. imports on a 12-month basis, down from 17.9% a year prior and well below peaks of greater than 21% in the last decade. The decrease partially reflects increased trade with other Asian nations including Vietnam as companies shifted supply chains following the imposition of tariffs under the Trump administration.
China’s customs bureau said Tuesday the country’s exports fell 6.8% during the first two months of 2023 from a year earlier, extending a string of year-over-year declines stretching back to October. Imports fell by a larger-than-expected 10.2% in the January to February period, worse than December’s 7.5% year-over-year decline.
The U.S.’s combined exports to Canada and Mexico, meanwhile, rose 3.1% to $54.3 billion, and imports expanded 3.6% to $71.4 billion. January’s exports to the European Union grew 1.5% to $30.9 billion, while imports fell 3.1% to $47.3 billion.
The trade deficit with India, viewed as an alternative production site for those reducing operations in China, hit a record level. The U.S. imports from the country rose 19% from a year ago to $7.9 billion in January. India accounted for 2.6% of U.S. goods imports in 2022, its highest level in Census data back to 1992.
The growth in global trade is likely to slow in the coming months as the post-lockdown rebounds in demand wane and interest-rate increases by central banks cool major economies.
“We doubt that trade data signal the start of a sustained recovery,” said Andrew Hunter, deputy chief U.S. economist for Capital Economics, a research firm. Surveys show a decline in export orders, he wrote in a research note, while U.S. retail sales are likely to lose steam in February.
Already, movements have slowed in a range of trade-related sectors around the world, including container shipping, air freight, and orders for electronic components and raw materials, the World Trade Organization said last week.
The WTO’s goods trade barometer, a composite leading indicator of trade, fell to 92.2 in March from the previous level of 96.2 reported in November. A reading below 100 indicates trade is contracting relative to recent trends.