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US Trade Deficit Falls in March on Rise in Exports

May 4, 2023
"Trade flows will likely continue to see the effects of slower growth prospects domestically and abroad over coming months," said Rubeela Farooqi, chief U.S. economist at High Frequency Economics.

The U.S. trade gap narrowed in March as exports of goods including industrial supplies rose, according to government data released Thursday, but trade flows could weaken going forward.

As the world's biggest economy shows signs of cooling, analysts have said they expect softening in trade as consumers pull back on spending -- adding to the impact of cooling external demand.

In March, the overall trade deficit stood at $64.2 billion, narrowing more than expected by $6.4 billion from February, according to the Commerce Department.

Exports rose by $5.3 billion to $256.2 billion in March, while imports slipped by $1.1 billion to $320.4 billion.

"Trade flows will likely continue to see the effects of slower growth prospects domestically and abroad over coming months," said Rubeela Farooqi, chief U.S. economist at High Frequency Economics.

As weakening external demand and a strong dollar bogs down exports, while flagging domestic demand brings imports lower, economist Matthew Martin of Oxford Economics added: "We anticipate trade will pose a drag on GDP growth for the remainder of the year."

U.S. economic growth slowed to an annual rate of 1.1% in the first quarter, while the full impact of the Federal Reserve's interest rate hikes to rein in inflation and unrest in the banking sector threaten to weigh on the outlook ahead.

Among categories, Thursday's Commerce Department data showed the rise in exports was largely driven by goods such as industrial supplies and materials, mainly crude oil and fuel oil, alongside autos and parts.

Imports of goods such as semiconductors and certain petroleum products slipped, but that of consumer goods like pharmaceutical-related items rose.

Noting that "the strength in exports was driven entirely by petroleum products," Martin of Oxford Economics said the trade deficit would have widened in March excluding these goods.

"It's unlikely the strength in petroleum products repeats next month," he added.

The U.S. goods deficit with China declined to $22.9 billion in March, and that with the European Union dropped as well.

Copyright 2023, Agence France-Presse

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