Featured # Markets | 2 years ago

American Trade Deficit Grows Less Than Predicted

The U.S. trade deficit grew a lot less than analysts had expected for the month of April, even though the exports of goods rebounded strongly. This data suggests that trade will boost economic growth for the United States in the second quarter. The commerce department published Friday that the trade gap increased by 5.3 percent to $37.4 billion. March’s trade deficit fell to $35.5 billion from $40.4 billion, its smallest number since December 2013.

An official poll by economists predict the deficit rising to $41.3 billion for the month of April. However when it was adjusted for matters of inflation, the deficit widened to $57.6 billion. Since the trade deficit for April was lower, trade will most likely contribute to the nation’s gross domestic product (GDP) in the April-June period. Trade has hindered GDP growth over the last three quarters.

Exports of goods in April increased by 3.5 percent to $120.1 billion. Exports are being undermined by an unusually strong dollar and poor global demand. But with the dollar’s rally and U.S.-made goods becoming increasingly competitive globally, some of the pressure to increase exports is disappearing. Nationwide exports of goods and services increased by 1.5 percent to $182 billion this month. In comparison, exports to the European Union fell by 6.0 percent, while goods shipped to Canada rose 1.1 percent. Exports to China fell by 3.2 percent.

Imports of goods increased by 2.4 percent to $178 billion in April, which helps pick up the large domestic demand. Part of this increase did promote a rise in oil prices, which average $29.48 per barrel in April. That number is up from $27.68 in April, up from $27.68 in March. Imports from China spiked by 10.5 percent. And even with exports falling, the seemingly sensitive U.S. China trade deficit grew by 16.3 percent to $24.3 billion in April.

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