US industrial recession over, Barclays says after US trade data

America's shortfall in trade on goods with the rest of the world increased in January as stronger consumption boosted purchases from overseas.

The US trade deficit on goods widened from $64.4bn in December to $69.2bn in January, according to the US Census Bureau.

Economists had penciled in a shortfall of $66.0bn.

In nominal terms, exports were 0.5% ahead month-on-month following a rise of 3.2% in the month before.

Weakness in sales of capital goods abroad was especially acute, with exports of that category down by 3.8% but offset by a 10.8% surge in automobile exports and 2.4% rise in those of consumer goods.

Imports on the other hand were higher for a fourth month running, rising by 2.5% on the month after a 1.9% gain in the previous month.

Data hints at significantly stronger spending on equipment, Barclays Gapen says

Purchases overseas of industrial supplies - which includes petroleum - were up by 2.4% on the month, as those of capital goods were up 1.1% and those of automotive imports by another 2.9%.

The strength in capital goods imports pointed to significantly higher spending on equipment, to the tune of a 4.2% quarterly annualised rise, Michael Gapen at Barclays Research said.

In parallel, consumer goods imports increased by 5.4%, "matching the strength in household spending around the turn of the year," he said.

"The trade deficit has now widened in three of the past four months. In part, this reflects the stabilization and rise in energy prices, as some of the improvement in nominal goods imports reflects petroleum. In addition, we think the widening in the trade deficit reflects the end of the multi-year industrial recession in the US. Finally, we see the strength in imports as coinciding with durability of household spending. While exports have risen in six of the past eight months, they have not kept up with the pace of import growth, largely because of the more modest growth environment externally," Gapen added.

Following Tuesday's wholesale inventories and goods trade data, Barclays's tracking estimate for first quarter 2017 GDP was running at 2.0%, versus 1.8% after the revised fourth quarter GDP data released earlier that same day.