The US trade deficit widened less sharply than expected in April, with economists cheered by evidence of slowing demand for imported consumer goods and petroleum products.
Data released yesterday added to hopes that the deterioration in the US trade position might be drawing to a close.
The gap between imports and exports increased from $61.9 billion (€49 billion) to $63.4 billion - less than the $65 billion forecast by economists.
Imports of consumer goods declined by $1.3 billion in April, a 3.5 per cent fall on the previous month.
In addition, the volume of energy-related petroleum imports dropped 1.5 per cent, suggesting that rising prices are starting to check US demand. The price of these imports rose by 10 per cent.
"We appear to be reaching a turning point in terms of the underlying deficit," said Brian Bethune, US economist at Global Insight, a consultancy.
"The decline in volume of petroleum products is particularly welcome and suggests that demand is finally starting to stagnate."
Many economists believe that the underlying deterioration of the trade position should moderate as US consumers tighten their belts and growth picks up in Europe and Japan.
Evidence has mounted in recent weeks that the long-awaited cooling of the US economy is under way.
The latest employment figures pointed to slowing jobs growth. Increases in wages are barely keeping pace with the rising cost of living.
Annual revisions reduced the trend level of the deficit, scaling up services exports and lowering imports of goods.
The US deficit with Europe and Asia (excluding China) was flat compared with the same month last year.
However, the US trade deficits widened with both the Opec countries and China.
The trade shortfall with China rose to $17 billion from $15.6 billion in March.
The most recent, semi-annual report by the Bush administration on currency practices stopped short of accusing China of currency manipulation.
However, there is mounting impatience within the administration, and especially in congress, over China's reluctance to revalue its currency - which some economists argue is as much as 40 per cent overvalued.
Notwithstanding the encouraging signs in the trade data, some economists fear that rising crude oil prices may continue to put upward pressure on the headline figures for the deficit.
