U.S. Trade Gap Narrower Than Forecast as Service Exports Rise

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Skelly Sees Snapback Amid ‘Noisy’ U.S. Economic Data

The U.S. trade deficit was narrower than forecast in March as record exports of services partly cushioned a drop in merchandise shipments, Commerce Department data showed Thursday.

Key Points

  • Gap little changed at $43.7 billion (forecast was $44.5 billion) from a revised $43.8 billion in February 
  • Exports decreased 0.9 percent to $191 billion, biggest drop since October, led by energy, autos and pharmaceuticals
  • Imports fell 0.7 percent to $234.7 billion on capital goods and industrial supplies
  • Exports of services rose 0.6 percent to a record $64.7 billion, led by finance and maintenance and repair

Big Picture

The data help explain how trade ended up making a slight contribution to economic growth last quarter, while highlighting the sometimes under-appreciated role of services in the figures.

Even with the cooling of exports and imports during the month, the outlook for international trade looks relatively stable. Global growth is showing signs of picking up and the Trump administration has backed away from rhetoric such as a pledge to label China a currency manipulator. Meanwhile, steady gains in jobs and wages will help Americans afford products from overseas.

Economists are trying to look beyond the noise of the first two months of the year, with fluctuations that analysts attributed to the timing of the Chinese New Year holiday.

The latest figures might provide some more ammunition for Trump administration officials as they seek to reduce the trade gap and wring more favorable terms from trading partners.

The goods-trade deficit with Mexico widened to $7 billion, the highest since November 2007, as imports rose to a record $28.1 billion. The gap with China increased to $24.6 billion from $23 billion in February. At the same time, exports to the European Union and South Korea rose to records, while shipments to Germany were the highest since 2008.

Other Details

  • Merchandise-trade deficit widened to $65.5 billion on a balance-of-payments basis, from $65.2 billion
  • After eliminating the effects of price fluctuations, which generates the numbers used to calculate GDP, the merchandise-trade gap was little changed at $60 billion
  • Petroleum deficit widened to $7.9 billion, the biggest since July 2015

(An earlier version of this story was corrected to remove a reference to a preliminary goods-trade deficit calculated on a different basis)

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