Trade Gap Narrows Again in January

Washington, DC, March 9, 2007--The U.S. trade deficit narrowed again in January, adding to the sense that the trade gap has at least stabilized and may even be starting on a downward trend, a government report showed Friday.

The nation's trade deficit narrowed by 3.8% to $59.1 billion, the Commerce Department said. This is the fourth narrowing of the deficit in the past five months. Read full government report.

Economists had expected the deficit to narrow to $60.4 billion.

December's trade deficit was revised slightly to $61.5 billion from the initial estimate of $61.2 billion.

As a result of the revisions, for all of 2006, the U.S. trade deficit amounted to a record $765.3 billion, wider by 6.8% from 2005. It was the fifth year in a row that the trade gap set a new record high.

The recent improvement in the trade gap has had a positive effect on growth in gross domestic product. The trade balance contributed 1.4 percentage points to fourth quarter growth and Friday's report indicates that the deficit would add to growth in the first quarter.

In January, exports rose to a new record level while imports declined slightly.

Exports increased 1.1% to $126.7 billion, while imports declined 0.5% to $185.8 billion. Exports of goods alone rose 3.9% to $65.4 billion.

The largest gain came in capital goods exports, which set a new record. The increase was paced by higher orders for civilian aircraft orders, which surged 13.1% in the month. Exports of agricultural products and consumer goods also set new record highs.

Meanwhile, the U.S. imported a record amount of agricultural products and capital goods. Imports of autos declined in January.

The nation's petroleum deficit widened 4.7% to $21.8 billion, the highest level since September. The increase came despite a lower price for imported oil last month: The average price per barrel of oil fell to $52.23 in January from $53.84 in December. This is the lowest price of imported oil since last March.

The U.S. imported much more oil in the month, 320.1 million barrels, equating to 10.3 million barrels per day, up from 293.5 million, or 9.5 million barrels per day in December.

Despite the overall improvement, the U.S. trade deficit with China widened to $21.3 billion in January from $17.9 billion in the same month last year.

The U.S. trade deficit with the European Union was the lowest since January 2004 as exports to the region set a new record.