By Lucia Mutikani

WASHINGTON (Reuters] – The U.S. Trade Deficit in Goods fell in February, after reaching a record in January. Exports rebounded and this helped to offset any gains in economic growth. Businesses could slow down their inventory accumulation in order to counter the increase in GDP.

According to the Commerce Department, Monday’s deficit dropped 0.9% to $106.6 Billion. Exports increased by 1.2%, to $157.2 billion. Exports rebounded due to a 6.3% increase in consumer goods shipments.

The growth in food exports was 3.6% and the increase in industrial supplies 2.6%. However, motor vehicle exports declined 3.4% because of a continued shortage in global semiconductors. Exports of capital goods as well as other goods also declined significantly.

The imports of goods increased 0.3% to $263.7 trillion. These were slowed by both a 9.9% decrease in motor vehicle imports and a 3.0% decline in food imports. However, there was a strong increase in the imports of other goods and industrial supplies.

As did imports of capital goods, so too has the demand for consumer goods.

For six consecutive quarters, trade has been a negative factor in gross domestic product growth. This could continue to be a problem this quarter.

Although businesses replenished their inventories in February of this year, they were less prolific than those in the final months of 2021. Following an increase of 1.1% in January’s wholesale stock, the figure rose by 2.1%. After a January 1.9% increase, retail inventories increased 1.1% in February.

After surging 2.5% last January, motor vehicle inventories grew 0.9%. Retail inventories rose 1.2%, excluding motor vehicles. They accelerated 1.7% in January. This component is included in the calculation of GDP Growth.

The fourth quarter saw inventory investment accelerate at an impressive seasonally adjusted annualized rate $171.2 billion, which contributed 4.90 percent to quarter’s 7.0% pace of growth.

Despite the rise in February inventories will likely be neutral to GDP growth. They would have to grow at an equal rate to fourth quarter growth to make a contribution to that quarter’s growth. Estimates of first-quarter GDP growth are generally below 1.0%.