US Trade Deficit Unexpectedly Continues To Narrow In April

Shipping containers are seen at the Port Newark Container Terminal   Thomson Reuters

Shipping containers are seen at the Port Newark Container Terminal Thomson Reuters

U.S. April trade deficit narrowed 2.1% to -$46.2 billion, from a revised -$47.2 billion in March which was -$49.0 billion.

Canada's trade deficit in April narrowed to the lowest in six months as imports slumped and exporters continued to show signs of strength.

The goods deficit decreased 1.5% to $68.3 billion, while the services surplus slipped 0.1% to $22.1 billion.

In April, the trade deficit in the USA reached a low of seven months as exports increased to record highs, driven by an increase in the number of shipments of soybeans and industrial materials.

Increases in exports of industrial supplies and materials and foods, feeds, and beverages were partly offset by a sharp drop in exports of civilian aircraft.

"A lot could happen in May and June of course, particularly now that tariffs covering nearly $50bn of steel and aluminum imports are in place on key allies including Canada, Mexico and the European Union, with those countries imposing retaliation on USA exports", Pearce said.

On the other hand, imports of other commodities showed a decline; such as petroleum products by 26.5 percent, plastics by 2.1 percent, corn by 18.6 percent, and wood and articles thereof by 18.4 percent. Washington and Beijing have threatened tit-for-tat tariffs on goods worth up to $150 billion each.

Exports to the United States rose 3.2 percent while imports dropped by 1.4 percent. Talks to head off a trade war between the world's two largest economies have so far failed to produce a resolution, even though China has offered to step up purchases of USA farm and energy products.

Canadians' auto buying binge seems to be waning, with imports of motor vehicles down 5.8 per cent in April. 3 billion and not the $49.0 billion previously reported.

The agency said the deficit amounted to $1.9 billion compared with a deficit of $3.9 billion in March. Crude oil imports rose $1.0 billion in April, with prices averaging $54.50 per barrel. Imports of consumer goods were down 4.9 percent during the month.

Imports from China were unchanged in April.

Meanwhile, exports of some other commodities saw a decline in March such as crude oil, which decreased by 28 percent, potatoes (3.7 percent), pastries and various food preparations (1.2 percent) and fertilizers (48.1 percent).

Unit labor costs, the price of labor per single unit of output, rose at a 2.9 percent pace in the first three months of the year.

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