Business | Economy
US trade deficit narrows as economy weakens
Decline in March data caused by demand for imports falling 2.9%, the largest monthly decline since December 2001.
- AP
- Published: 23:56 May 9, 2008
Washington: The US trade deficit narrowed sharply in March as demand for imports fell by the largest amount since the last recession was ending.
The Commerce Department reported Thursday that the deficit totalled $58.2 billion, down 5.6 per cent from February, a larger improvement than had been expected.
The smaller deficit reflected spreading weakness in the US economy, which cut demand for imports by 2.9 per cent, the largest one-month decline since December 2001, one month after the last recession ended.
The decline, which pushed imports down to $206.7 billion, was led by a 5.9 per cent decrease in America's foreign oil bill. The amount of petroleum fell as the average price for crude oil jumped to an all-time high.
Imports of autos and a wide variety of other consumer goods from furniture to toys and clothing also fell, reflecting the hard economic times facing US consumers.
Exports, which have been one of the few strong points in this period of weakness, suffered a setback in March, falling to $148.5 billion, still the second highest level on record but down 1.7 per cent from the all-time high set in February.
Sales of commercial airliners, cars, computers and machinery were down.
For the first two three months of this year, the trade deficit is running at an annual rate of $715.5 billion, up slightly from last year's imbalance of $708.5 billion, which had been the first decline after the deficit set records for five consecutive years.
Economists believe that the deficit will decline this year and that exports will continue to benefit from a weaker dollar and imports will fall, reflecting the weak US economy, which many analysts believe is in a recession.
For March, the deficit with Canada, America's biggest trading partner, edged up 0.4 per cent to $6.5 billion, while the deficit with the European Union rose by 9.1 per cent to $7.5 billion even though US exports to the EU edged up 1.2 per cent to a record $24.1 billion.
This reflected the boost that US products have got from the euro's rise.
The deficit with Japan rose 8.9 per cent to $7.5 billion while the imbalance with the Organisation of Petroleum Exporting Countries totalled $14.1 billion, an increase of 6.8 per cent from February.
The politically sensitive deficit with China dropped by 12.4 per cent to $16.1 billion, the smallest level in two years, as US exports to China climbed to the second highest level on record.
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