The Bureau of Economic Analysis and the Census Bureau said that the U.S. trade deficit grew to $44.4 billion in January from a revised $38.1 billion in December. December’s deficit was the lowest level since January 2010, so it might have been expected that the deficit in January would stabilize somewhat.
The consensus estimate was for a deficit of $42.6 billion, making the actual number slightly higher than what was expected. Goods exports dropped from $132.8 billion to $130.8 billion and goods imports rose from $188.9 billion to $192.5 billion.
Much of the shift in the goods trade was the result of changes in petroleum costs. The non-petroleum trade balance was not significantly different in January ($41.3 billion) than it was in December ($41.5 billion). Meanwhile, the price of West Texas intermediate crude was $88.25 a barrel in December, rising to $94.69 in January (and $95.32 in February). The result was an increased cost in petroleum imports, up from $14.9 billion to $16.0 billion. At the same time, petroleum exports dropped from $6.5 billion to $5.4 billion. This caused the petroleum trade balance to increase from $8.3 billion to $10.6 billion. Note that this brings it back to where it was in November, making December’s petroleum balance a bit of an anomaly.
The largest decline in goods exports stemmed from industrial supplies and materials, which declined by $2.6 billion in January. Separating out crude oil, fuel oil, and petroleum products from the industrial supplies numbers, this would have declined by $700 million. Similarly, imports of industrial supplies and materials rose $4.0 billion, with almost $3.7 million of that figure stemming from petroleum.
Given the extent to which the trade balance fell in December, the change in January is more dramatic than it is in reality. As noted above, the bulk of the shift was due to higher petroleum costs. Non-petroleum exports and imports were not dramatically different than they were in December.
We have begun to see some signs of improvement in many of our largest trading partners, with the major exception of the Eurozone as a whole. We need to see higher manufactured goods exports in 2013 than the reported 5.5 percent growth experienced in 2012.
Exports are critically important to creating manufacturing jobs. In January we failed to make progress on the goal of growing exports. Manufacturers are looking to policymakers in Washington move forward with a robust trade agenda that will help open more markets to U.S. manufactured goods exports. If we continue the rest of the year with slow export growth similar to January we won’t reach the goal of doubling exports.
Chad Moutray is chief economist, National Association of Manufacturers.
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