Trade Deficit Narrowed a Bit in April

The United States’ trade imbalance with the rest of the world narrowed slightly in April, providing a tentative sign that less-lopsided trade could help lift the economy this year.With economic growth expected to be only about two-thirds the pace of last year, trade could be an important factor in keeping the economy from stalling, economists said. Growth has slowed in the United States, but economies in Asia and Europe are surging and snatching up more and more American exports.
The amount of goods and services sold to foreign countries increased in April by $247 million, to $129.5 billion, the Commerce Department said yesterday; imports fell by $3.6 billion, to $188 billion.
Those shifts put the trade deficit at $58.5 billion for the month — $3.9 billion smaller than it was in March.
To be sure, the trade deficit is still huge. For January through April, it was a cumulative $235.3 billion. But it is growing less rapidly, even after inflation is taken into account. In real terms, the deficit for the first four months of the year fell by 3 percent compared with the period last year.
“The big picture is we’re seeing improvement,” said Michael Carey, chief economist for North America with Calyon, who predicted that trade would add almost a point to growth in gross domestic product in the second quarter. “That should help because we have other sectors of the economy that are not performing so well.”
In the first quarter, trade subtracted a full point from the G.D.P., which expanded just 0.6 percent, the slowest in more than four years. While trade has occasionally aided growth for a quarter, it has not added to a full year’s growth since 1995.
But growth overseas, helped by a weak dollar and slower domestic growth, should help pull the deficit tighter. Economists expect that trade will contribute — if only slightly — to the G.D.P. this year. (The dollar rose, however, to a two-month high against the euro in trading yesterday, driven in part by the trade report.)
“The weaker dollar and the buoyancy of demand overseas should boost United States exports,” said Paul Ashworth, senior United States economist for Capital Economics. “And slightly slower U.S. economic growth will help curb import growth. We are seeing it already a little.”
There were some signs in the monthly trade report that consumer spending was cooling. The $3.6 billion drop in imports in April was concentrated in consumer goods, which declined by $1.5 billion. Imports of pharmaceutical products, electronics, clothing and jewelry all decreased. Imports of automobiles, auto parts and engines declined $1 billion.
Businesses also pulled back on import spending, purchasing less telecommunications equipment, industrial machinery and building materials.
Americans also imported less oil in April, according to the Commerce Department figures, but rising prices caused the overall value to rise.
The price of imported crude oil jumped in April to $57.28 a barrel, from $53 a barrel a month earlier. That pushed up the value of crude oil imports to $17.5 billion, from $17.2 billion in March. But imports averaged about 10.2 million barrels a day, down from 10.5 million in March.
Still, hugely imbalanced trade remains a problem, as the deficit with China showed. It stood at $19.4 billion in April — by far the largest deficit with any single country. Last April, it was $17.1 billion.
Economists said the growing deficit with China underscored just how difficult it will be for the United States to even out its trade relationship with the rest of the world.
“About a third of the deficit comes from China,” said Timothy Rogers, chief economist with Briefing.com. “Unless you get some real progress there, it’s unlikely you’ll see a real turn.”
Indeed, while trade is expected to improve this year, long-term improvement will be more difficult, economists said. “It’s something that’s been there for quite a while, and something that’s likely to last for quite a while. I don’t think there’s a quick fix.”