Higher Oil Shipments Increase Deficit to $64 Billion
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The American trade deficit widened more than forecast in March as higher oil shipments drove the biggest increase in imports in more than four years.
The deficit rose 10% to $64 billion, the Commerce Department said yesterday in Washington. Imports and exports were the second highest on record.
Climbing fuel costs also pushed the price of foreign goods higher for a third month in April, the Labor Department reported separately.
America imports two-thirds of its oil and the biggest rise in crude prices since June is offsetting the benefit to American exports from a weaker dollar. A more competitive exchange rate and expanding economies in Europe and Asia have trimmed the deficit from a record $68.9 billion in August.
“We were paying sharply more in March for imported oil, and frankly that’s only going to contribute to a lot more red ink in April,” chief economist at PNC Financial Services Group in Pittsburgh, Stuart Hoffman, said.
The wider shortfall will probably lead the government to revise down its estimate of first quarter economic growth, economists said.
The trade shortfall with China narrowed to $17.2 billion in March from $18.4 billion a month earlier. Imports from China were the lowest since May 2006 while exports were a record.
Through the first three months of the year, the deficit with China climbed to $57 billion, up from $47.3 in the same period last year and accounting for almost a third of the overall gap.
Economists at Morgan Stanley forecast revised figures will show the economy grew 0.9 percent in the first three months of the year, compared with the government’s advance estimate of 1.3% issued last month.
“We saw a big increase in oil imports, but in general growth in the U.S. is slowing and we should see import growth moderating,” a global economist at Wachovia Corp. in Charlotte, N.C., Jay Bryson, said.”As we look forward, trade should be less of a drag because of global demand for U.S. exports.”
The dollar fell in the minutes after the release of the trade figures before recovering. The Dow Jones Industrial Average fell 147.74 points, or 1.1%, to 13,215.13.
