The U.S. trade deficit narrowed more than forecast in April, as a weaker dollar pushed exports to a record and demand for imports waned.
The deficit fell 6.2 percent, the most in six months, to $58.5 billion, the Commerce Department said Friday. The gap declined even as the shortfall with China widened.
The dollar’s decline and expanding economies in Europe and Asia are fueling demand for American-made goods, and the deficit is retreating from a record $67.6 billion in August. The gain in exports might also help economic growth accelerate after the slowest quarter in more than four years.
“The trade imbalance seems to be permanently on the mend,” said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York. “Certainly, trade is going to contribute to growth in the second quarter.”
In April, exports rose 0.2 percent, to a record $129.5 billion, as sales of foods, plastics and consumer goods such as jewelry improved. Imports slipped 1.9 percent, to $188 billion, reflecting big declines in imports of foreign cars, televisions and clothing, and a small dip in America’s foreign oil bill.
“The rest of the world is growing,” said Diane Swonk, chief economist at Mesirow Financial in Chicago. “With the tailwind of a weak dollar, that’s good news to keep our factories humming. This will probably easily throw GDP growth over the 3 percent range for the second quarter.”
Economies overseas are faring better than in the U.S. Gross domestic product in the 13 countries that use the euro rose 3 percent in the 12 months ended in March, compared with 1.9 percent in the U.S.
A weaker dollar, which makes American goods cheaper abroad, also is boosting exports. The dollar is down 6.4 percent since the beginning of last year against a trade-weighted basket of currencies of major U.S. trading partners.
Through the first four months of the year the deficit is running at an annual rate of $705.9 billion, a drop of 7 percent from last year’s record $758.5 billion.
The deficit with China widened to $19.4 billion in April, the worst showing since January, and through the first four months of the year is running 11.9 percent higher than a year ago, when the gap with China set a record at $232.6 billion.
The shortfall with Canada, America’s largest trading partner, rose 7.4 percent in April, to $5.8 billion, but the imbalance with Mexico, the other partner in the North American Free Trade Agreement, fell 22.3 percent, to $5.3 billion. The gap with the European Union increased 17.1 percent, to $9 billion.
