US trade balance expected to widen for the third consecutive month - TDS

Millan Mulraine, Deputy Head US Macro Strategy at TDS, suggests that the US external trade balance is expected to widen for the third consecutive month, with the deficit rising to $46.54B in February from $45.68B.

Key Quotes

“The worsening in the trade balance should be on account of the sharp rise in the merchandise trade deficit, which will be partially offset by the modest improvement in the services balance.

Despite the widening in the deficit, which will underscore the continued drag from the external sector on domestic growth, overall trade activity should rebound. During the month, export activity should post its first monthly advance since September, rising at a respectable 1.0% m/m pace, reflecting some improvement in global demand. Import activity should also rebound, gaining 1.2% m/m.

The overall tone of this report should be encouraging, reflecting some stabilization in global economic activity, even as the external sector continues to be a source of drag on domestic US economic activity.”