Trade Deficit Expands Less Than Anticipated
The U.S. trade deficit increased by 6.3% in April to its fourth-largest mark ever amid record-high imports and exports, a government report said Friday, but the gap was not as large as expected.
The monthly trade deficit of $57 billion was smaller than a median forecast of $58 billion made by economists, a sign that U.S. economic growth could be stronger than thought. The Commerce Department also lowered its estimate of the March trade gap to $53.6 billion from $55 billion previously.
“The trade numbers are a little more moderate. The rate of deterioration is slowing. That’s good news for the economy. It’s being less of a drag,” said Dana Johnson, chief economist with Comerica Bank in Ann Arbor, Mich.
Although the April data were better than expected, the deficit remained on track to surpass last year’s record of $618 billion. The shortfall for the first four months of the year was up 22% from the same period in 2004.
U.S. exports rose 3% to a record $106.4 billion in a positive development for the U.S. economy, aided by a rise in exports of civilian aircraft and other capital goods.
Shipments to China and South and Central America also set records at $3.4 billion and $6.1 billion, respectively.
The politically sensitive trade gap with China widened 14% in April to $14.7 billion, despite the record U.S. exports to that country.
Surging oil prices helped push overall imports up 4.1% from March to a record $163.4 billion, the largest monthly increase since November 2002.
The Bush administration has been pressing China to drop its practice of pegging its currency at 8.28 yuan to the dollar and move to a more flexible exchange rate. U.S. Treasury Secretary John Snow was expected to repeat that demand in a meeting in London on Friday with Chinese Finance Minister Jin Renqing.
China’s currency peg, which is supported by huge purchases of dollars, has widened the trade deficit by keeping the value of the greenback higher than it would be otherwise.
A Labor Department report Friday showed that U.S. import prices fell by a much larger-than-expected 1.3% last month, suggesting even less inflation pressure from the trade sector than analysts had thought.
