US goods trade deficit narrows sharply in March; retail inventories rise

THE US trade deficit in goods narrowed sharply in March as exports surged and imports declined, which augurs well for economic growth in the first quarter.

The goods trade deficit contracted 8.1 per cent last month to US$84.6 billion, the Commerce Department said on Wednesday (Apr 26).

Exports of goods increased US$4.9 billion to US$172.7 billion. They were boosted by industrial supplies, which include crude oil, motor vehicles as well as consumer goods. Food exports fell 4.5 per cent.

Goods imports fell US$2.5 billion to US$257.3 billion, pulled down by decreases in industrial supplies, capital goods and other goods. Imports of consumer goods rose 2.4 per cent.

The Commerce Department also reported that wholesale inventories edged up 0.1 per cent in March after a similar gain in February. Retail inventories increased 0.7 per cent after rising 0.3 per cent in the prior month.

Excluding motor vehicles, retail inventories rebounded 0.4 per cent after falling 0.1 per cent in February. This component goes into the calculation of gross domestic product (GDP).

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The report was published ahead of the government’s advance GDP estimate for the first quarter on Thursday.

Trade has contributed to GDP growth for three straight quarters. Inventory investment was the biggest driver of GDP growth in the fourth quarter. According to a Reuters survey of economists, GDP likely increased at a 2.0 per cent annualised rate last quarter.

The economy grew at a 2.6 per cent pace in the fourth quarter. REUTERS