U.S. Trade Deficit Narrows Amid Drop In Imports From Japan
2011-06-09 18:05:24
With the value of exports rising and the value of imports falling, the Commerce Department released a report on Thursday showing that the U.S. trade deficit unexpectedly narrowed in the month of April.
The report showed that the trade deficit narrowed to $43.7 billion in April from a revised $46.8 billion in March. Economists had expected the trade deficit to widen to $49.0 billion from the $48.2 billion originally reported for the previous month.
The unexpectedly narrower deficit came as the value of exports rose by 1.3 percent to $175.6 billion, while the value of imports fell 0.5 percent to $219.2 billion.
The Commerce Department said that the increase in the value of exports reflected increased exports of industrial supplies and materials and capital goods.
Meanwhile, the modest drop in the value of imports was due to a decrease in petroleum imports as well as a sharp drop in imports from Japan due to supply disruptions caused by the recent earthquake.
The value of imports from Japan dropped to $8.8 billion in April from $11.8 billion in March. As a result, the trade deficit with Japan narrowed to $3.6 billion from $6.1 billion, with the $2.5 billion drop accounting for much of the decrease in the overall trade deficit.
The report also showed that the goods deficit narrowed to $58.1 in April from $61.1 billion in April, while the services surplus widened to $14.4 billion from $14.3 billion.
While the narrower trade deficit for April may lead economists to raise their estimates for second quarter GDP growth, Paul Dales, Senior U.S. Economist at Capital Economics, said the drop in the deficit will eventually be reversed as the temporary effects caused by disruptions from Japan's earthquake fade.
"It is possible that such effects lingered or even got worse in May, although we already know that Japanese production rebounded strongly last month," Dales said.
He added, "This may mean that a positive contribution from net trade to GDP growth in the second quarter will go some way to offsetting the slowdown in other parts of the economy, although there will also be some offsetting drag as auto inventories presumably fell too."
The Commerce Department report also showed that the politically sensitive trade deficit with China widened to $21.6 billion in April from $18.1 billion in March.