2023.03.0813:25:00UTC+00U.S. Trade Deficit Widens Less Than Expected To $68.3 Billion In January

The U.S. trade deficit saw a modest increase in the month of January, according to a report released by the Commerce Department on Wednesday.

The Commerce Department said the trade deficit widened to $68.3 billion in January from a revised $67.2 billion in December.

Economists had expected the trade deficit to climb to $68.9 billion from the $67.4 billion originally reported for the previous month.

"Imports and exports are likely to weaken as consumers and businesses pull back, leading the deficit to move mainly sideways through the first half of the year," said Matthew Martin, U.S. Economist at Oxford Economics.

He added, "As such, we expect trade's impact on GDP to be much more muted than the large positive contributions to growth in the final three quarters of 2022."

The slightly wider deficit reflected a sharp increase in the value of imports, which shot up by 3.0 percent to $325.8 billion in January after jumping by 1.1 percent to $316.2 billion in December.

The surge in imports reflected a spike in imports of automotive vehicles, parts and engines as well as a notable increase in imports of cell phones and other household goods.

Meanwhile, the report also showed a substantial rebound in the value of exports, which soared by 3.4 percent to $257.5 billion in January after slumping by 1.2 percent to $249.0 billion in December.

Exports of consumer goods moved sharply higher, led by pharmaceuticals, while exports of capital goods and automotive vehicles, parts and engines also increased.

However, the sharp increase in the value of exports of goods was partly offset by a notable decrease in the value of exports of services, particularly travel.

The Commerce Department also said the goods deficit narrowed to $90.1 billion in January from $90.7 billion in December, while the services surplus shrank to $21.8 billion from $23.5 billion.