trade deficit narrows in April

The U.S. trade deficit narrowed in April after hitting a record high in March on the back of rising exports and falling imports, Commerce Department data showed on Tuesday. The goods and services deficit with the rest of the world stood at $87.1 billion in April, down nearly 19.1% from the previous month, when it reached $107.7 billion. dollars (figures revised downwards). Analysts had forecast a deficit of $89.6 billion.

In detail, exports reached a volume of 252.6 billion dollars (+3.5%) and imports represented 339.7 billion dollars (-3.4%). Exports were driven by the sale abroad of industrial goods and materials, notably natural gas and other petroleum products, as well as food and capital goods. The United States also earned more revenue from its services, especially in the travel and transportation industries.

The slowdown in imports of consumer goods, industrial goods and capital goods reflects slowing demand, which can be explained by high inflation. However, on the services side, receipts from tourism and other professional services increased. “In the short term, demand for exports will continue to face strong headwinds due to vulnerable economic conditions in Europe with the ongoing war in Ukraine while the threat of further lockdowns will continue to make growth in the China uncertain despite Shanghai reopening“, notes Mahir Rasheed, economist of Oxford Economics. “For the year as a whole, the trade balance should weigh on GDP growth, but the tightening of monetary policy by the Fed and the slowdown in domestic demand will probably encourage a more balanced trade balance with imports falling and gradually increasing exports“, adds the expert.

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