09:56 | 04/05/2018 Global Economy
Trade gap in merchandise sinks to US$68 billion in March, down 10.3 percent from US$75.9 billion in prior month.
|Trade had been expected to be a drag on first quarter growth|
The trade deficit in goods narrowed 10.3 percent to US$68 billion, according to the government’s advanced report released Thursday. This was the first narrowing of the deficit in seven months and came in well below the US$73.4 billion estimate of economists polled by MarketWatch.
The government’s advanced report on wholesale inventories showed a 0.5 percent gain in March. And advanced retail inventories fell 0.4 percent.
Imports fell 2.1 pct in March and the declines were widespread. Of the major categories, only auto imports rose in the month. Exports rose 2.4 pct during the month. The narrowing of the deficit in goods points to a smaller overall trade deficit in March.
Trade had been expected to be a drag on first-quarter growth because of the jump in imports in January and February, but the sharp narrowing of the deficit in March means that it will at least be much less of a negative. First-quarter GDP data is due on Friday.
Ian Shepherdson, chief economist at Pantheon Macroeconomics, forecast a goods deficit of US$69 billion. “If we’re right, GDP forecasts for the first quarter will be revised up by about half a percentage point.”
Michael Moran of Daiwa Capital Markets, however, said the weak import data suggests there could be weakness elsewhere. “We would not adjust GDP growth by a half percentage point, however, as fewer imports will probably mean softer than expected results elsewhere (e.g. consumer spending, business investment in equipment, or inventory investment,)” he told clients.
Not much movement immediately after the report, but U.S. stocks DJIA, +0.02 pct were stronger in afternoon action.