Trade deficit drops by bigger-than-expected amount
Updated: 2008-05-10 00:07
WASHINGTON -- The US trade deficit narrowed sharply in March as demand for imports fell by the largest amount since the last recession was ending.
The Commerce Department reported Friday that the deficit totaled $58.2 billion, down 5.6 percent from February, a larger improvement than had been expected.
The smaller deficit reflected spreading weakness in the US economy, which cut demand for imports by 2.9 percent, the largest one-month decline since December 2001, one month after the last recession ended.
The decline, which pushed imports down to $206.7 billion, was led by a 5.9 percent decrease in America's foreign oil bill. The amount of petroleum fell as the average price for crude oil jumped to an all-time high. Imports of autos and a wide variety of other consumer goods from furniture to toys and clothing also fell, reflecting the hard economic times facing US consumers.
Exports, which have been one of the few strong points in this period of weakness, suffered a setback in March, falling to $148.5 billion, still the second highest level on record but down 1.7 percent from the all-time high set in February. Sales of commercial airliners, cars, computers and machinery were all down.
The big improvement in the March deficit was expected to prompt the government to revise upward its estimate for economic growth for the first three months of the year. Ian Shepherdson, chief economist at High Frequency Economics, said he expected economic growth to be revised to a rate of 1.1 percent in the first three months of this year, well above the government's initial estimate last week that the economy grew at a barely discernible 0.6 percent rate during the first quarter.
The politically sensitive deficit with China dropped by 12.4 percent to $16.1 billion, the smallest level in two years, as US exports to China climbed to the second highest level on record, led by sales of medical testing equipment and computer chips. At the same time, imports of Chinese products dropped sharply, reflecting lower demand for cloths, textiles and toys.
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