US trade gap widens for first time since July

Thursday, May 14, 2009 at 12:14 AM Posted by Beijing News


The US trade deficit increased in March for the first time in seven months as exports sank to a 2004 low amid the global economic crisis crippling trade, Commerce Department data showed Tuesday.

The March trade gap rose slightly to a seasonally adjusted 27.6 billion dollars, from a revised 26.1 billion in February.

That was narrower than analysts' consensus forecast of 29.0 billion dollars.

Imports fell for the seventh month in a row, to 151.2 billion dollars, the lowest level since August 2006, the Commerce Department reported.

Exports, which had increased in February, fell to 123.6 billion dollars in March, a level last seen in September 2004.

A higher imported oil bill and a sharp jump in the huge and politically sensitive trade gap with China factored into the gap increase.

Separately, the government announced that Treasury Secretary Timothy Geithner would make his first official visit to China for talks June 1-2.

The issues to be discussed would include "strengthening US-China economic ties to promote stable, balanced and sustained economic growth in the two nations."

On an annual basis, the March trade deficit was down a steep 52 percent after falling in February to a 1999 low.

Overall, US trade volume with the rest of the world declined by 1.6 percent in March from February.

"Given the weak state of overseas economies, we do not expect the US recovery to be export-led," said Nigel Gault, chief US economist at IHS Global Insight.

"As US recovery does begin to take hold it will mean an increase in imports as US demand recovers. As a result, the trade deficit will likely widen later this year," Gault said.

Elsa Dargent at Natixis projected the April gap would widen under the effects of President Barack Obama's massive 787-billion-dollar stimulus package enacted in February.

The program of tax cuts and infrastructure spending aims at kick-starting the world's largest economy out of a severe recession that began in December 2007.

"We expect the widening of the trade deficit to continue in the month ahead as exports will adjust markedly downward and imports may recover," Dargent said, partly due to "the impact of the fiscal stimulus."

According to the data, oil imports rose in March after five straight months of decline, to 14.1 billion dollars in March from 13.7 billion in February.

The average price of imported crude oil leapt to 41.36 dollars in March from 39.22 dollars in the prior month, the first price rise after five months of decline.

"These data are better than assumed in the advance first-quarter GDP report; we estimate the data are enough to generate a revision upward of 0.2 percentage points to headline growth," he said.



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