The trade deficit increased slightly to $39.1 billion in January from December’s revised number of $39 billion, the Commerce Department said Friday, despite an increase in exports. Compared to January last year, the trade deficit decreased by $3 billion.
Exports went up to $192.5 billion while imports totaled at $231.6 billion.
“It’s not much of a game changer. The numbers were slightly disappointing,” said Sean Incremona, senior economist at 4Cast Ltd.
Economists’ expectations for the deficit were around $38.5 billion pushing today’s numbers closer to the lower end of forecasts of $42.1 billion.
Incremona and other economists said the rest of the year will see small changes in the deficit but nothing will be very impressive, perhaps only a small narrowing.
The disappointing figures were mainly due the cold. Trade has been stagnant in the last few months as some areas were hit hard by bad weather. This was not helped by lower demand for other goods like motor vehicles.
Exports of goods were supported by an increase in trade of industrial supplies including oil, capital goods, and consumer goods. A drop in exports of automotive vehicles and parts as well as food offset this.
Industrial supplies and capital goods strengthened imports in January.
Despite the overall disappointment in the figures, the increased activity in petroleum trading may be a sign that the domestic economy is improving, even if imports may always outpace exports.
“Domestic demand for petroleum is higher which means the consumption pace is up. This will really help narrowing the deficit but not by much,” said BBVA Compass Chief Economist Nathaniel Karp.
Export of petroleum products may also increase with the U.S. looking to expand its natural gas exports, further narrowing its deficit. The U.S. does not export natural gas yet but several contracts have been approved allowing companies to sell to other countries by 2015.
But Karp said even if exports of natural gas and other petroleum products are reversed to tend to domestic demand, it will still mean the US economy is growing because people are consuming more.
Imports of petroleum products went up 8.3% to $31.7 billion while exports fell 9% to $12.4 billion compared to December’s results.
Trade figures in the coming months will be highly influenced by economic improvement in the Eurozone. But the slower growth in China and Latin America may temper any growth.
Europe and emerging markets are in a good footing that may expand the ability of the US to sell goods and services. The U.S. exported $21.5 billion to the European Union in January.
Canada and Mexico took the most American exports in January.
China remained the largest source of imports with goods amounting to $38.2 billion.
For the next month, it is expected that the trade deficit will improve on the back of oil imports and exports.