The U.S. international trade deficit widened to its worst level in five months in February, according to a Commerce Department report (link opens in PDF) released today.
The total deficit expanded 7.6%, to $42.3 billion, missing analyst expectations of just $38.8 billion, smaller than January's revised $39.3 billion reading.
Deficits improve in two ways: (1) exports increase more than imports, or (2) imports decrease more than exports. The first scenario is generally favored over the second, as it more directly shows signs of an internally strengthening economy. February's results show the opposite of both, where a 1% decline in exports was accompanied by a 0.4% increase in imports.
Dividing the deficit into goods and services, international trade looks quite different. The services surplus stayed strong, decreasing just $0.8 billion to $19.4 billion. At the same time, the goods deficit expanded $2.2 billion, reaching $61.7 billion for February.
Industrial supplies and materials exports fell the most ($2.7 billion) for goods, offset slightly by a $1.2 billion increase in consumer goods exports. On the import side, the deficit didn't get any help from a $1.0 billion increase in automotive vehicles, parts, and engines imports.
The U.S. currently enjoys its largest trade surplus for goods with Hong Kong ($2.9 billion), while China snagged the biggest U.S. trade deficit of $20.9 billion.