U.S. Trade Deficit Unexpectedly Shrinks

The foreign trade deficit narrowed in April to $43.7B from $46.8B in March, initially reported as $48.2B. Expectations had been for $48.8B according to Action Economics. The latest figure was the least since December as exports rose 1.3% m/m but imports slipped 0.4%. In chained 2005 dollars the overall deficit in goods fell to $44.2B, its least since February of last year, as real exports increased 11.2% y/y and imports rose 7.5%.

Petroleum imports fell 5.5% (+21.1% y/y) as petroleum import volumes fell a sharp 14.5% and by 14.5% y/y as well. The per barrel cost of crude oil increased to $103.18 from $93.76 in March. Twelve months earlier, prices averaged $77.13. The total value of crude petroleum imports rose 21.1% y/y but the quantity fell 10.9%.

Overall imports slipped 0.4% (+15.9% y/y). Goods imports fell 0.5% (17.8% y/y) but when adjusted for higher prices they fell 3.1% (7.5% y/y). Nominal imports of foods, feeds & beverages rose 4.2% (20.3% y/y) though when adjusted for higher prices imports rose 1.9% (0.7% y/y). Nonauto capital goods imports rose 1.4% (15.9% y/y) after the 3.5% March gain. Virtually all of the y/y gain reflected higher volumes. Nonauto consumer goods imports jumped 5.0% (16.2% y/y) and all of the annual increase was real. Auto imports fell 12.9% (+9.0% y/y). Again, these changes mostly reflect volumes, not prices.

Total exports rose 1.3% (18.8% y/y) after a 4.9% March jump. A 1.7% increase (21.3% y/y) in goods exports translated to a 0.8% rise (11.2% y/y) in real terms. It reflected a 4.9% (34.6% y/y) jump in industrial supplies, a 3.1% increase (14.1% y/y) in capital goods and a 1.8% increase (12.0% y/y, ) in nonauto consumer goods. Automobile exports fell 6.8% m/m (+15.2% y/y).

Services exports increased 0.4% (12.2% y/y) reflecting gains in travel (16.5% y/y) and passenger fares (25.9% y/y). Imports of services ticked up 0.1% (6.5 % y/y) reflecting lesser changes in travel and passenger fares, held back by the lower dollar.

By country, the goods trade deficit with China increased to $21.6B as exports rose 20.8% y/y and imports rose 14.1% y/y. (Imports are roughly four times the level of U.S. exports.) The trade deficit with Japan improved sharply to $3.6B as exports rose 16.7% y/y and imports fell 6.5% y/y. (Imports from Japan are roughly twice the level of U.S. exports.) The trade deficit with the European Union improved slightly to $7.5B as U.S. exports rose 23.8% y/y and imports grew 24.9% 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.

The Fed's latest Beige Book covering regional economic conditions is available here.