The U.S. January trade balance posted a better-than-expected $37.3 billion deficit as imports fell in a probably temporary adjustment. As the world economy recovers, markets should brace for deeper U.S. trade gaps ahead.

Imports fell $3.1 billion, more than the $500 million dip in exports, narrowing the trade gap.

The January import drop reflected crude oil imports falling $2.3 billion on a drop in volume. Prices were steady and are rising into the spring, suggesting oil import costs could rise in future.

Among other import figures was a $1.5 billion drop in autos, a $600 million decrease in computers, a $130 million decline in civilian aircraft, along with drops in consumer goods. The first category might relate to slack demand for foreign cars as Toyota’s sales fell on recall publicity.

Exports saw a $500 million decline for civilian aircraft and a $500 million drop for autos against gains in many other areas.

The unadjusted trade balance data by country included: China, with an $18.3 billion deficit, up from $18.1 billion in December; Japan with a $3.3 billion shortfall — the lowest since May 2009 — down from $4.6 billion; OPEC with a $7.2 billion, an increase from $6.8 billion; and Canada with a $3.9 billion deficit — the highest since October 2008 — a rise from a $3 billion gap.

On a gross domestic product basis, the real trade balance in January was little changed from its fourth-quarter average. This suggests so far that first-quarter trade will be a neutral in the GDP accounts.

— Market News International

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