U.S. Trade Deficit Increases With Higher Oil Prices

Higher oil prices acted to deepen the U.S. trade deficit to its widest since last June. The foreign trade deficit increased in March to $48.2B versus $45.4B in February, revised from $45.8B reported initially. Expectations had been for $47.0B according to Action Economics. Exports rose 4.6% following a 1.5% February decline. Imports increased 4.9%. In chained 2005 dollars, the overall deficit in goods deteriorated to $50.1B from $49.3B in February.

The primary factor causing last month's deficit deterioration was an 18.0% m/m jump (30.1% y/y) in petroleum imports driven by higher prices. Petroleum import volumes rose a lesser 8.8% (1.9% y/y). The per barrel cost of crude oil increased to $93.76 from $87.17 in February. Twelve months earlier, prices averaged $74.32. The total value of crude petroleum imports rose 24.3% y/y but the quantity fell 1.5%.

Overall imports rose 4.9% (16.4% y/y). Goods imports rose 5.8% (18.7% y/y) but when adjusted for higher prices, imports rose 3.7% (10.1% y/y). Nominal imports of foods, feeds & beverages ticked up 0.4% (15.8% y/y) though when adjusted for higher prices imports fell 2.3%. Nonauto capital goods imports rose 3.9% (19.7% y/y) and reversed most on the February decline. Virtually all of the y/y gain reflected higher volumes. Nonauto consumer goods imports fell 4.5% (+7.8% y/y) and all of the annual increase was real. Auto imports rose 11.0% (22.5% y/y). Again, these changes mostly reflect volumes, not prices.

Total exports rose 4.6% (14.9% y/y) after a 1.5% February decline. A 6.2% increase (18.2% y/y) in goods exports reflected a 16.0% increase (26.5% y/y) in autos & parts, which was all real and a 6.0% increase (28.0% y/y) in foods, feeds & beverages, although this y/y gain was virtually all prices. Imports of nonauto consumer goods rose 5.3% in March (5.2% y/y), all real, and capital goods exports rose 2.6% (11.1% y/y), again all real.

Services exports increased 1.1% (6.1% y/y) reflecting gains in travel and passenger fares. Imports of services rose 0.8% (4.9% y/y) reflecting lesser changes in travel and passenger fares, held back by the lower dollar.

By country, the goods trade deficit with China held roughly stable m/m at $18.1B as exports rose 28.6% y/y and imports rose 13.6% y/y. (Imports are roughly four times the level of U.S. exports.) The trade deficit with Japan deteriorated to $6.1B, it deepest since 2008, as exports rose 13.3% y/y and imports rose 13.7% y/y. (Imports from Japan are roughly twice the level of U.S. exports.) The trade deficit with the European Union deteriorated sharply to $9.0B as U.S. exports rose 16.4% y/y and imports grew 19.0% y/y. (Imports from Europe are roughly one-third larger than U.S. exports.)

The international trade data can be found in Haver's USECON database. Detailed figures are available in the USINT database. The expectations figure is in the AS1REPNA database.

Understanding The Great Trade Collapse of 2008-09 and the Subsequent Trade Recovery from the Federal Reserve Bank of Chicago is available here.