TRADE DEFICIT WIDENS

The U.S. trade deficit widened to $42.3 billion in February from $39.3 billion in January.

Economists were expecting the deficit to narrow to $38.5 billion.

Exports fell $2.0 billion to $190.4 billion, but imports climbed $1.0 billion to $232.7 billion.

"While we expect net trade to be a modest drag on domestic economic activity, the strong performance in consumer goods and auto demand can be seen as a signal of revival in domestic consumer spending activity after the weakness in the previous two months," said TD Securities Millan Mulraine. "Notwithstanding this, the weak performance in export activity, which has declined in two of the last three months suggests that the global environment has largely remained unsupportive to US economic activity."

"The core non-oil Deficit ex-aircraft rose $1.2 billion, thanks mostly to an out-of-the-blue 2.1% leap in imports of services, worth $0.8 billion," noted Pantheon Macroeconomics' Ian Shepherdson. "This appears
to reflect the payment of fees for broadcast rights to the Winter Olympics, so we expect a reversal in March."

From the BEA:

Goods (Census Basis)

The January to February decrease in exports of goods reflected decreases in industrial supplies and materials ($2.7 billion) and capital goods ($0.9 billion). Increases occurred in consumer goods ($1.2 billion); other goods ($0.6 billion); and automotive vehicles, parts, and engines ($0.1 billion). Foods, feeds, and beverages were virtually unchanged.

The January to February decrease in imports of goods reflected decreases in capital goods ($1.2 billion); industrial supplies and materials ($0.3 billion); and foods, feeds, and beverages ($0.1 billion). Increases occurred in automotive vehicles, parts, and engines ($1.0 billion); consumer goods ($0.1 billion); and other goods ($0.1 billion).

Exports of goods were virtually unchanged from February 2013 to February 2014. Decreases occurred in industrial supplies and materials ($1.8 billion); automotive vehicles, parts, and engines ($0.2 billion); and other goods ($0.1 billion). Increases occurred in consumer goods ($1.5 billion); capital goods ($0.3 billion); and foods, feeds, and beverages ($0.2 billion).

The February 2013 to February 2014 decrease in imports of goods reflected decreases in industrial supplies and materials ($0.9 billion) and consumer goods ($0.9 billion). Increases occurred in automotive vehicles, parts, and engines ($0.9 billion); capital goods ($0.4 billion); and other goods ($0.1 billion). Foods, feeds, and beverages were virtually unchanged.

Services

Exports of services were virtually unchanged from January to February. Increases in other private services ($0.1 billion), which includes items such as business, professional, and technical services, insurance services, and financial services, and in royalties and license fees ($0.1 billion) were mostly offset by a decrease in passenger fares ($0.2 billion). Changes in the other categories of services exports were relatively small.

Imports of services increased $0.8 billion from January to February. The increase was mainly accounted for by an increase in royalties and license fees ($0.8 billion), which included payments for the rights to broadcast the 2014 Winter Olympic Games. Other private services increased ($0.1 billion). Partly offsetting these increases was a decrease in other transportation ($0.1 billion), which includes freight and port services. Changes in the other categories of services imports were relatively small.

The February 2013 to February 2014 increase in exports of services was $3.0 billion or 5.5 percent. The largest increases were in other private services ($1.7 billion), in travel ($0.8 billion), and in royalties and license fees ($0.6 billion). Within other private services, the largest increase was in business, professional, and technical services.

The February 2013 to February 2014 increase in imports of services was $2.5 billion or 6.7 percent. The largest increases were in other private services ($1.4 billion), in royalties and license fees ($0.8 billion), and in travel ($0.3 billion). Within other private services, the largest increase was in business, professional, and technical services. The increase in royalties and license fees was mostly accounted for by payments for the rights to broadcast the 2014 Winter Olympic Games.