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U.S. Trade Deficit Unexpectedly Narrows Amid Jump In Exports


A report released by the Commerce Department on Wednesday showed the U.S. trade deficit unexpectedly narrowed in the month of February amid a jump in the value of exports.

The Commerce Department said the trade deficit narrowed to $49.4 billion in February from $51.1 billion in January, while economists had expected the deficit to widen to $53.5 billion.

The narrower deficit came as the value of exports surged up by 1.1 percent to $209.7 billion in February from $207.4 billion in January.

Exports in the volatile civilian aircraft category soared, while exports of automotive vehicles, parts and engines also rose.

The report also showed a more modest increase in the value of imports, which edged up by 0.2 percent to $259.1 billion in February from $258.5 billion in the previous month.

A spike in imports of cell phones and other household goods was partly offset by a steep drop in imports of industrial supplies and materials.

Michael Pearce, Senior U.S. Economist at Capital Economics, said net trade is on track to add as much as 1 percentage points to first quarter GDP growth but forecast net trade would switch back to being a drag on economic growth later this year.

"Admittedly, we expect a further slowdown in domestic demand which will continue to weigh on import growth," Pearce said.

He added, "But with economic growth in the rest of the world set to remain subdued, and the past appreciation of the dollar still feeding through, we expect export growth to be even weaker."

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