U.S. international trade activity contracted for a fifth straight month in January, Panjiva's analysis of official figures shows, with a 0.8% year-over-year decline following a 1.0% slide in December. As before a contraction in trade in goods has been the main reason, with a 2.6% drop being the result of a 3.6% slide in imports. That is consistent with advance figures, discussed in Panjiva's research of Feb. 28, which featured weakness across consumer and capital goods.

Trade in services continued to expand, with a 5.1% increase in services exports being the strongest expansion since May 2018. That was largely down to a turnaround in the fortunes of financial services, which improved by 3.2%, the first increase since June, while telecom and technology services surged 12.6% higher.

The resulting trade deficit across goods and services therefore fell by 15.8% year over year to $45.4 billion including an 8.8% slide in the goods deficit of $67.0 billion. The latter has been the key trade metric for the Trump administration in terms of adjudging the fairness or otherwise of trade dealings with other countries.

In that regard, the trade war with China has been an unqualified success — the trade deficit with China fell 24.4% to $26.1 billion, the lowest figure for January since 2012. That has come at the expense of a 16.9% slide in total trade.

The latter included a 20.0% slide in imports, Panjiva's data shows, the 13th straight decline due to the imposition of tariffs, while exports increased by just 1.0%. The latter indicates that the full fruits of the phase-one trade deal and associated purchasing commitments have yet to be borne.

On the same basis the main uncompleted item of business is a trade deal with the EU — the trade deficit increased by 4.7% year over year and now represents 18.1% of the total compared to China's 38.7%. The U.S. Trade Representative has already noted that trade deals with the EU — as well as the UK and Kenya as well as phase-two deals with China and Japan — are priorities for 2020.

Christopher Rogers is a senior researcher at Panjiva, which is a business line of S&P Global Market Intelligence, a division of S&P Global Inc. This content does not constitute investment advice, and the views and opinions expressed in this piece are those of the author and do not necessarily represent the views of S&P Global Market Intelligence. Links are current at the time of publication. S&P Global Market Intelligence is not responsible if those links are unavailable later.