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Economy in Brief

U.S. Trade Deficit Lower: Exports Surged, Oil Prices Fell
by Tom Moeller May 12, 2006

The U.S. foreign trade deficit fell to $62.0B during March, the lowest level since last August. The decline exceeded Consensus expectations for a deficit of $67.0B.

Total exports recovered from the prior month's drop with a 1.9% jump led by a 1.5% (16.0% y/y) surge in capital goods exports. Exports of advanced technology products led that gain and surged 24.2% (NSA, 17.3% y/y). Nonauto consumer goods exports also were strong and rose 1.7% (12.0% y/y). Exports of industrial supplies & materials posted outsized strength with a 6.0% (18.0% y/y) increase that was offset by a 4.2% (+11.3% y/y) decline in automotive exports.

Imports contracted by 0.8% during March, pulled down by an 8.3% (+21.0% y/y) drop in petroleum imports. That seasonally adjusted decline reflected a 7.4% (-4.1% y/y) rise in the quantity of crude oil imports and 5.1% rise in the quantity of all energy-related petroleum product imports. Crude oil prices dropped 2.7% (+27.0% y/y) to an average $52.26 per bbl. Brent crude oil prices have since risen to an average $71.49 per barrel this month from an average $69.51 in April and $61.71 during March.

Imports of capital goods reversed a February decline with a 4.5% (15.1% y/y) increase. Imports of advanced technology products jumped 27.9% (NSA, 20.9% y/y) while nonauto consumer goods imports rose 2.5% (13.0% y/y).

The US trade deficit with China deepened to $15.6B ($201.6B for 2005) and the trade deficit with Japan rose to $7.6B ($82.7B in 2005). The trade deficit with the Asian NICs halved again versus February to $0.5B ($15.9B in 2005). The deficit with the European Union deepened sharply to $10.1B ($122.4B in 2005) after four months of narrowing.

Racing To The Top: How Global Competition Disciplines Public Policy from the Federal Reserve Bank of Dallas can be found here.

Foreign Trade Mar Feb Y/Y 2005 2004 2003
Trade Deficit $62.0B $65.5B $53.7B (3/05) $723.6B $617.6B $494.8B
  Exports - Goods & Services 1.9% -1.6% 11.6% 10.5% 12.6% 4.6%
  Imports - Goods & Services -0.8% -2.6% 12.9% 12.8% 16.6% 8.5%
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