The US trade deficit shrank sharply in April as exports hit a record high and imports fell, reflecting the impact of Japan's earthquake-tsunami disaster, official data showed Thursday.

The Commerce Department reported the trade deficit in goods and services fell to a seasonally adjusted $43.7 billion from $46.8 billion in March. That was the smallest gap in the year to date.

But the politically sensitive shortfall with China widened to $21.6 billion, almost 20 percent more than the March level.

The overall deficit, which had been bigger than expected in March, surprised analysts whose consensus estimate was $48.7 billion.

"It was nice to see the trade gap narrow but most of that came from problems with Japan's supply chain, so don't expect the improvement to continue," said Joel Naroff at Naroff Economic Advisers.

US exports rose 1.3 percent in April to a record $175.6 billion, led by exports of industrial supplies and materials, capital goods, consumer goods and travel services, the department said.

The strength of exports suggests that global demand is holding up well in the face of the rising cost of food and energy, said Aaron Smith at Moody's Analytics.

"With export orders still looking pretty strong, the dollar weak, and commodity prices off their highs, there is good reason to expect strong export growth to continue, albeit at a slightly reduced pace," Smith said.

Imports slipped 0.4 percent from March, to $219.2 billion. The decline was notably solid given that the prices of US imports rose 2.2 percent, according to the data.

High oil prices continued to weigh on the US trade balance, but surprisingly, the US reduced its net petroleum import bill by 27 percent, by boosting exports and cutting imports as crude prices soared in April on the back of uprisings in Arab countries.

Ian Shepherdson, chief US economist at High Frequency Economics, warned that the monthly drop in the petroleum deficit was "unsustainable."

The April trade report reflected supply disruptions from Japan's March 11 earthquake-tsunami disaster, with imported automobiles and auto parts tumbling 12.9 percent from the prior month. Those from Japan fell by more than a half from March.

The trade gap with Japan, the fourth-largest US trading partner, shrank to its lowest level since January 2010: $3.6 billion.

With the country's largest trade partner, Canada, the deficit shrank slightly to $2.5 billion.

The deficit also narrowed with the 17-nation eurozone, to $7.0 billion.

Still, the US trade imbalance was trending upward. Based on the Commerce Department's three-month moving average, which helps to smooth monthly volatility, the April deficit was 10 percent higher than a year ago.

Analysts noted that the April improvement in the trade balance would be an additional boost to economic growth in the second quarter.

Gross domestic product growth slowed to a sluggish 1.8 percent annual rate in the first quarter and recent data has shown raised alarms that the recovery begun two years ago is losing traction.

Federal Reserve chairman Ben Bernanke warned this week there had been a "loss of momentum" in the already tepid US jobs market, where unemployment rose to 9.1 percent last month.

"The current recovery is less vigorous than we would like," he said in a speech to bankers in Atlanta, Georgia.

The latest jobless claims numbers from the Labor Department Thursday reinforced that gloomy outlook. Initial claims for insurance benefits rose last week, above economists' forecasts.

Tweet

Related Links Global Trade News