U.S. trade deficit declines as imports slump most in seven years

WASHINGTON – America’s trade deficit shrank more than forecast in March as imports fell in percentage terms by the most in seven years and outpaced a decline in shipments overseas.

The gap narrowed 13.9 percent to $40.4 billion, the smallest since February 2015, the Commerce Department reported Wednesday. The median forecast in a Bloomberg survey called for a $41.2 billion deficit.

Imported merchandise declined 3.6 percent, the most since February 2009, as American companies strived to get inventories in line with weaker first-quarter demand. At the same time, shipments overseas fell for the fifth time in six months amid soft global sales.

“The most troubling thing was in the consumer sector — we’re not exactly sure what’s going on there and whether it’s sort of a one-off effect,” in terms of the slump in imports, Jay Bryson, global economist at Wells Fargo Securities LLC, in Charlotte, N.C., said before the report.

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Still, “I think you’re going to see import growth outpace export growth as you go forward, and therefore trade will continue to be a modest headwind to growth in the U.S.,” he said.

Estimates in the Bloomberg survey ranged from trade gaps of $40 billion to $48.7 billion after a previously reported $47.1 billion deficit a month earlier.

After eliminating the effects of price fluctuations, which generates the numbers used to calculate gross domestic product, the trade deficit narrowed to $57.4 billion in March from $63.2 billion a month earlier. March’s real trade gap was the smallest since July.

First quarter
The Commerce Department’s initial estimate showed trade subtracted 0.34 percentage point from first-quarter GDP. The economy expanded an annualized 0.5 percent. Trade has contributed to U.S. growth in just one quarter out of the last six.

Imports decreased to $217.1 billion in March, the smallest since February 2011, from $225.1 billion a month earlier. The slump in purchases from overseas was broad-based and included capital equipment, consumer goods and industrial supplies such as oil.

America’s petroleum deficit narrowed to $3 billion, the smallest since February 1999.

Exports decreased 0.9 percent to $176.6 billion in March from $178.2 billion the prior month. Middling overseas demand hobbled orders for consumer goods, which declined to a three-year low. Exports of industrial supplies were the weakest since February 2010.

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