June 16, 2024

U.S. Trade Deficit Widens in March on Pricier Oil

The trade deficit rose 6 percent to $48.2 billion, the Commerce Department said Wednesday. That’s the highest level since June 2010 and up from $45.4 billion in February.

Exports increased to $172.7 billion, the most on records dating back to 1993. A weaker dollar has made U.S. goods cheaper overseas. Exports have also risen because of rapid growth in developing countries. U.S. companies exported more autos, chemicals, and agricultural goods in March.

However, oil imports soared to $39.3 billion, an 18 percent rise from the previous month. It was the highest level since August 2008 and reflects steep price increases, as well as greater demand. Excluding oil imports, the deficit narrowed.

The average price for a barrel of imported crude oil was $93.76 in March, up nearly 7.6 percent from February. Oil prices have risen even further since then, despite declines in recent weeks. Oil closed at about $104 per barrel on Tuesday.

The trade deficit is currently running at a $562.8 billion annual pace. That’s above last year’s total of $495.7 billion. Economic growth generally slows when imports outpace exports because more jobs go to foreign workers.

Economists expect the fast rise in exports to boost growth in the April-June quarter, even with high oil prices widening the deficit. That’s because the government adjusts for inflation when calculating the nation’s gross domestic product.

“The details in the report are encouraging for economic momentum,” said Joseph LaVorgna, an economist at Deutsche Bank, in a note to clients. “Strong external demand fueled by a near-record low … dollar is lifting exports, while the rise in imports is evidence of burgeoning domestic demand.”

The trade deficit with China, meanwhile, decreased to $18.1 billion. That’s down slightly from February.

But it is expected to rise in the coming months. On Tuesday, China reported a big increase in its April trade surplus. Its imports fell while exports jumped 30 percent. That’s likely to raise pressure on China to let its currency rise.

The trade gap between the two countries was a top issue in high-level meetings between U.S. and Chinese officials earlier this week, though little progress was made on the currency issue.

The devastating earthquake and tsunami in Japan on March 11 didn’t impact U.S. trade figures. Imports from Japan rose by $1.3 billion and U.S. exports to that country also increased. But disruptions to Japan’s auto production are likely to reduce U.S. imports in coming months, economists say. That could narrow the trade gap.

U.S. companies sold more autos, industrial materials, and food and consumer goods in March. Auto and auto part exports rose to $11.6 billion from just below $10 billion in February.

In addition to oil, imports of computers, autos and auto parts, and aircraft rose in March.

Article source: http://feeds.nytimes.com/click.phdo?i=6c4ed34cd2f3438959889a9a1acfe43e

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