Advance U.S. Trade Deficit in Goods Deepens in March

The advance estimate of the U.S. trade deficit in goods grew to $$64.22 billion in March from $59.88 in February. A $53.6 billion deficit had been expected in the Action Economics Forecast Survey.

Exports of goods declined 6.7% m/m (-8.9% y/y) in March following a 0.7% rise. The m/m weakness reflected declines in each of the export categories. Motor vehicles & parts exports weakened 17.8% (-18.8% y/y) in March after two months of strong increase. Exports of "other" goods fell 8.1% (-4.2% y/y) last month following a 5.3% February increase. Industrial supplies exports were off 7.5% (-5.1% y/y) after rising 1.6%. Exports of nonauto consumer goods weakened 5.0% (-5.4% y/y) after falling 4.2%. A 4.3% decline (-9.8% y/y) in capital goods exports came after edging 0.5% higher in February. Foods, feeds & beverages exports eased 0.1% (+0.7% y/y), off slightly for the second consecutive month.

Imports of goods fell 2.4% (-9.6% y/y) in March, about the same as they did in February. The decline was led by a 9.0% falloff (-12.8% y/y) in imports of automotive parts & engines which followed a 4.8% rise. Nonauto consumer goods imports weakened 8.3% (-14.9% y/y) after falling 2.1%. Increases were posted last month in all other import categories. Capital goods imports improved 2.7% (-7.4% y/y) after falling for two months. Foods, feeds & beverage imports rose 3.4% (-0.5% y/y) and reversed February's shortfall. Imports of "other" merchandise improved 2.7% (5.3% y/y), about as they did in February. Industrial supplies & materials imports gained 0.4% (-9.4% y/y) following two months of sharp decline.

The advance international trade data can be found in Haver's USECON database. The expectation figure is from the Action Economics Forecast Survey, which is carried in AS1REPNA.

The Conference Board's Index of Consumer Confidence declined 9.5% (-3.4% y/y) during March to a level of 120.0 following a 1.7% February gain, revised from 0.2%. A decline to an index level of 114.8 had been expected in the Action Economics Forecast Survey. Over the last 20 years, there has been a 70% correlation between the level of confidence and the y/y change in real consumer spending.

The index of consumer expectations plunged 18.4% (-10.3% y/y) to the lowest level since October 2016. A lessened 18.2% of respondents felt that business conditions would improve, down from a 26.9% high in March 2017. A greatly lessened 15.5% of respondents felt there would be more jobs. That was reduced from a 23.8% high in March 2017. Somewhat fewer respondents felt that income would increase.

The present situation index eased 0.9% (+2.9% y/y) after a 2.6% decline. A fairly steady 39.6% of respondents felt that business conditions were good and a reduced 44.9% thought that jobs were plentiful. Jobs were viewed as hard to get by 13.9%, which was steady m/m, but up from 11.0% during the last six months.

Expectations for the inflation rate in twelve months were steady m/m at 4.5%, but that was down from a high of 5.1% nine months earlier. Interest rates were expected to move higher in 12 months by 35.3% of respondents, half the percentage during 2018. A reduced 1.6% planned to buy a new home, but that remained up from 0.9% in December. A greatly lessened 3.8% planned to buy a new car while 47.6% planned to buy a major appliance, down from 55.0% in February.

By age group, the index of confidence amongst those under age 35 declined 9.6% (-4.5% y/y). For respondents aged 35-54, confidence fell 8.4% (-2.6% y/y) and for those over age 55, it fell 9.4% (-4.1% y/y).

The Consumer Confidence data are available in Haver's CBDB database. The total indexes appear in USECON, and the market expectations are in AS1REPNA.