imageEconomic Indicators9 hours ago (Mar 06, 2020 08:51AM ET)

By Lucia Mutikani

WASHINGTON (Reuters) – The U.S. trade deficit narrowed more than expected in January as imports declined, and further decreases are likely as the coronavirus outbreak disrupts the flow of goods and services.

The Commerce Department said on Friday the trade deficit dropped 6.7% to $45.3 billion also as exports fell.

Data for December was revised slightly to show the trade gap widening to $48.6 billion instead of $48.9 billion as previously reported.

Economists polled by Reuters had forecast the trade gap tightening to $46.1 billion in January.

When adjusted for inflation, the goods trade deficit fell $2.3 billion to $77.7 billion in January.

While the smaller trade deficit would provide a boost to the calculation of gross domestic product, declining imports mean less inventory accumulation, which could offset the lift to GDP.

Falling imports are also likely to lead to shortages, which could hurt both consumer and business spending.

The coronavirus epidemic has disrupted businesses and production in China, with Beijing extending the Lunar Year holidays in an effort to limit the spread of the virus.

Some factories that have restarted work are running below normal capacity, which economists says will weigh on Chinese exports.

The politically sensitive goods trade deficit with China increased 5.1% to $26.1 billion in January, with exports tumbling 18.7% and imports falling 1.2%.

Trade added 1.5 percentage points to GDP growth in the fourth quarter, exceeding the 1.17 percentage points contribution from consumer spending, which accounts for more

than two-thirds of U.S. economic activity.

The economy grew at a 2.1% annualized rate in the fourth quarter, matching the pace notched in the July-September period.

In January, goods imports fell 2.0% to $203.4 billion.

There were decreases in imports of industrial supplies and materials, as well as imports of other goods.

Goods exports fell 1.0% to $136.4 billion in January.

There were decreases in exports of capital goods and industrial supplies and materials. But motor vehicle and parts exports increased.

U.S. trade deficit narrows in January; exports, imports fall

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