June 8 (Bloomberg) -- The U.S. trade deficit narrowed in April as a drop in imports overshadowed the first decline in exports in five months that reflected a slump in shipments to Europe.
The gap shrank to $50.1 billion, down 4.9 percent, from $52.6 billion in March and the second decrease in the last three months, Commerce Department figures showed today in Washington. The median forecast in a Bloomberg News survey of 73 economists called for the deficit to shrink to $49.5 billion.
American exports fell 11 percent to the European Union, where a sovereign debt crisis has pushed the region to the brink of recession and hindered the world economy. At the same time, slower job gains, cheaper crude oil and limited corporate investment may hold down the nation’s trade bill.
“We’re looking at a soft patch in exports, reflecting cooling global growth,” said Ed Kashmarek, an economist at Wells Fargo Securities LLC in Minneapolis, who projected a $50.7 billion April trade gap. “Weakness in Europe is definitely having an impact. We’re probably going to be seeing a softening in imports along with exports, helping to keep the deficit from widening.”
U.S. stocks rose, pushing the Standard & Poor’s 500 Index to the best weekly gain of the year, as investors awaited weekend talks among European finance officials for news of a potential bailout of Spain. The S&P 500 climbed 0.8 percent to 1,325.66 at the close of trading in New York.
French business confidence and Italian output declined, other reports showed, as recessions in at least six European countries weighed on demand and risked causing a quarterly contraction in France for the first time in three years.
Sentiment among French factory executives fell in May to 93 from a revised 94 in April, the Bank of France said today in an e-mailed statement. Italian industrial production dropped 1.9 percent in April from March, when it rose a revised 0.6 percent, Rome-based statistics office Istat said.
To combat a deepening slowdown as Europe’s debt crisis threatens global growth, China yesterday cut borrowing costs for the first time since 2008 and loosened controls on banks’ lending and deposit rates.
The U.S. trade deficit was projected to narrow from an initially reported $51.8 billion for March, according to the Bloomberg survey. Estimates ranged from gaps of $53 billion to $45.5 billion.
Today’s report also included annual revisions that showed the trade shortfall increased to $559.9 billion in all of 2011, the widest in three years, from $494.7 billion in 2010.
Exports declined 0.8 percent in April to $182.9 billion from March’s record high of $184.4 billion as overseas demand for capital goods and industrial supplies eased.
Imports fell 1.7 percent to $233 billion from a record high of $237.1 billion in the prior month. Inbound shipments of business equipment, industrial supplies and automobiles decreased in April.
The trade shortfall excluding petroleum narrowed to $22.1 billion in April from $24 billion. The import figures reflected an average price per barrel of crude oil at $109.94 in April, the highest since August 2008. Oil prices have cooled this month.
Brent crude oil for July settlement slipped $2, or 2 percent, to $97.95 a barrel on the London-based ICE Futures Europe exchange.
After eliminating the influence of prices, which are the numbers used to calculate gross domestic product, the trade deficit shrank to $48.5 billion from $49.5 billion.
Exports may stay under pressure because of the crisis in Europe. The 17-nation euro area will shrink 0.1 percent in 2012 and expand 0.9 percent in 2013, the Organization for Economic Cooperation and Development said on May 22, when it trimmed its forecast. By contrast, the OECD raised projections for U.S. growth, to 2.4 percent in 2012 and 2.6 percent next year.
Still, “the situation in Europe poses significant risks to the U.S. financial system and economy and must be monitored closely,” Federal Reserve Chairman Ben S. Bernanke said yesterday in testimony to Congress in Washington.
China, the world’s second-biggest economy, is cooling. It grew 8.1 percent in the first quarter of 2012 from a year earlier, the fifth straight deceleration. The U.S. trade gap with China widened to $24.6 billion in April, from $21.7 billion, today’s data showed.
DuPont Co., the most valuable U.S. chemicals producer, is among companies watching the situation in Europe. DuPont’s first-quarter earnings exceeded analysts’ estimates as its agriculture unit benefited from rising corn-seed demand in Brazil and an early spring in the U.S. and Europe.
In “Europe the macro trends are not good right now,” Nicholas Fanandakis, chief financial officer of Wilmington, Delaware-based DuPont, said in a June 6 conference call with analysts. “The economy is in a state of flux. Where it’s going to come out in the end is anyone’s guess.” Even so, the picture is mixed, with parts of the agriculture business “very strong” and segments such as “the industrial side not as strong an environment,” he said.
The recent pickup in the value of the U.S. currency may make America’s exports less competitive. The dollar has climbed about 5 percent from this year’s low in February against a trade-weighted basket of currencies from the country’s biggest trading partners, according to Fed data.
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