U.S. Trade Balance Deficit
Widens by 2.5 Percent

US trade balance

The U.S. Commerce Department released the trade balance for the month of March, which showed that the deficit widened to the highest levels in a year, but below market expectations as a result of the rising value of the U.S. dollar, where it continues to weigh down on exports, while rising imports continue to increase the trade deficit as demand levels improve gradually.

The trade deficit widened in March to $40.4 billion compared with the prior revised deficit of $39.4 billion, while the median estimates of markets were set at $40.5 billion. The report showed that exports increased by 3.2% to $147.9 billion, yet imports weighed down on the trade balance, as it increased by 3.2% to $188.3 billion.

The real dollar goods balance showed a widened deficit as well, where the deficit widened to $43.832 billion from the prior reported deficit of $42.294 billion, while the trade balance also showed that oil imports rose by 13.2% to $2.756 billion, where the average price per barrel averaged in March to $74.32.

Consumer’s behavior in the U.S. received a big boost due to the improvement in economical conditions that helped raise income and spending over the past two months by 0.5 and 0.6 percent respectively during the months of March and April, not forgetting the recent improvement that was witnessed in payrolls where the U.S. economy managed to add nearly 400 thousand jobs over the past two months. Nevertheless, the world’s leading economy continue to suffer from elevated unemployment levels that reached in April 9.9 percent, compared with the previous 9.7% that was reported a month earlier.

The main reason for the gap that increased 2.5 percent in the month of March comes due to the rise in import prices where it rose by 3.1 percent as Americans bought more goods made abroad, whereas the rise in the value of the Dollar hammered down exports, noting that the rise in exports reached 3.2 percent due to the improvement witnessed in global economies that is expected to continue to improve over the upcoming period.

trade balance graph






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