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Trade Deficit Widens, Market Drifts

Posted by Joseph Trevisani on Jun 4, 2013 9:41:00 AM

There was a time when today's 8.5% rise in the U.S. trade deficit from a more than three year low would have excited a flurry of trading and position adjustment. But those days are almost a generation in the past, when the trade deficit was still a novelty. The US had not registered a trade surplus in more than twenty years.

The April trade deficit widened to $40.3 billion, not quite as much as the -$41.0 billion forecast in the Reuters survey of economists but up from the revised -$37.1 billion total in March originally reported at -$38.8 billion.

Imports rose 2.4% to $227.7 billion from $222.3 billion in March and exports climbed 1.1% to $187.4 billion, the second highest total on record, from $185.2 billion.

The gain in imports reflected higher purchases of consumer goods, cars, phones, computers and business equipment which will help allay fears that the U.S. is entering another mid-year economic slowdown after yesterday's contraction in the manufacturing sector reported by the Institute for Supply Management.The numbers mirror the Conference Board consumer confidence statistic for May which at 76.2 was the best in over four years.

The trade deficit was split almost equally between oil imports at $19.7 billion and everything else at -$20.6 billion. It was the lowest oil import bill this year and the second lowest in 41 months since November 2009.

American exports to Japan dropped 1% to $5.05 billion from $5.6 billion and imports from the Asian nation also fell 1% to $11.9 billion from $12.1 billion.

Exports to the European Union fell 7.9% in April.

U.S. exports to China, which have been slipping in recent years, declined 4.7 % in April, perhaps reflecting the slowdown in Chinese economic growth.

Imports from China jumped 21.2 % in April to $24.1 billion from $17.9 billion in March.

 

Joseph Trevisani

Chief Market Strategist

WorldWideMarkets

 

 

 

Charts: Bloomberg

ScreenHunter 1233 Jun. 04 11.40

ScreenHunter 1234 Jun. 04 11.41

 

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