Trade Deficit Widens Even as US Exports Hit Another Record, Labor Market Still Healthy

- The Trade Deficit for January widened to -$68.5 billion versus estimates of -$66.5 billion and -$65.1 billion in December.
- Initial Jobless Claims for last week rose to 303K versus estimates of 290K and 295K the prior week.
- Continuing Claims rose to 2506K versus estimates of 2489K and 2477K prior.

BOTTOM LINE: The US trade deficit widened in January as the oil-import bill rose and purchases of inexpensive Chinese goods increased, Bloomberg reported. US exports rose 2.5% as record numbers of industrial supplies, vehicles and capital goods were shipped. However, imports rose 3.5% as the US economy remains stronger than most of its major trading partners. The deficit with OPEC countries widened 11.6% in January. I expect the trade deficit to improve only modestly over the intermediate-term as relatively strong US growth offsets most of the benefits from falling commodity prices.

First-time claims for US unemployment benefits unexpectedly rose last week while staying at a level that signals strength in the labor market, Bloomberg said. The four-week average of initial jobless claims rose to 293,500 versus 287,250 the prior week. According to a Bloomberg survey, payrolls in February probably rose by 210,000 up from 193,000 in January. I continue to believe the labor market will remain relatively healthy over the intermediate-term without generating substantial unit labor cost increases.