U.S. trade gap widens on oil prices

Higher oil prices and imports in March pushed the U.S. trade deficit to its widest level in six months, according to a government report Thursday that suggested weaker U.S. economic growth.

The trade gap grew more than 10% in March from the previous month to $63.9 billion as U.S. oil imports reached their highest level since August and the average price for imported oil rose to $53 a barrel from $50.71 in February, the Commerce Department said in a report.

Oil import prices continued to rise in April, a second report showed, suggesting further outward pressure on the trade deficit in the months ahead. Other import prices were surprisingly robust, analysts said.

The large March trade gap prompted some analysts to trim estimates of first-quarter U.S. economic growth to 0.7% or even less, from the 1.3% the government initially estimated last month.

“It indicates a downward revision in growth based on early estimates for the first quarter,” said Keith Hembre, chief economist at FAF Advisors Inc.

In a bit of good news overshadowed by other data, the Labor Department reported that the number of U.S. workers filing new claims for jobless benefits in the week ended May 5 fell unexpectedly by 9,000.

Overall U.S. imports rose 4.5% in March to $190.1 billion, led by a gain of more than 11% in imports of industrial supplies and materials, which includes crude oil.

Record imports of consumer goods and food, feed and beverages also helped push the overall tally higher.

U.S. exports, however, had another strong showing, rising 1.8% in March to $126.2 billion, second only to the record set in January.

U.S. exports to Canada, the European Union -- and individually to Germany -- and China set records, while shipments to Japan were the highest since March 2001.

“For us to increase our exports, we need other developed economies to do better and to grow and we’re beginning to see that,” Commerce Secretary Carlos Gutierrez said.

“One of the things we’re seeing that is very positive news, a nice turnaround, is exports to the European Union were up 22%” in the first quarter of 2007, he added.

The U.S. also exported record amounts of computer, telecommunications, aerospace and electronic equipment.

The closely watched U.S. trade deficit with China shrank 6.4% to $17.2 billion as imports from that country were the lowest since May 2006.

Despite widening dramatically in March, the trade gap for the first quarter of the year totaled $180.7 billion, smaller than the $191.6 billion in the same period last year when the annual deficit hit a record $765.3 billion.