The US trade deficit widened in April for a second month as exports dropped to the lowest level in almost three years and some of the largest economies continued to contract.
The gap between imports and exports grew 2.2 percent to $29.2 billion, in line with forecasts, from a revised $28.5 billion in March that was larger than previously estimated, the Commerce Department said today in Washington.
Foreign demand for US goods dropped 2.3 per cent, exceeding a decrease in imports. Imports may rebound first in coming months as the US economy
begins to expand, while exports languish until a recovery takes hold among trading partners from Japan to Germany, widening the deficit further.
That danger underscores Treasury Secretary Timothy Geithner’s call for other nations to implement stimulus and financial-rescue plans.
“I don’t think there is anything in this data that would point to the economy being in a trough or turning point” in April, said Brian Bethune.
“We’re still on a downward slope.” The trade gap was projected to widen to $29 billion from an initially reported $27.6 billion in March, according to the median forecast in a Bloomberg News survey of 73 economists.
Deficit projections ranged from $31.5 billion to $26 billion. A growing gap means trade will not help the economy this year as much as in 2008, when it contributed the most to growth in three decades.
Stocks rose around the world today, led by commodity producers as oil climbed to a seven-month high.
The Standard & Poor’s 500 Stock Index was up 0.7 per cent at 948.59 as of 9.40am in New York.
Treasuries fell, sending yields on benchmark 10-year notes to 3.89 per cent from 3.86 per cent late yesterday. The drop in exports reflected reduced foreign demand for engines, machinery and metals. At $121.1 billion, the level of exports was the lowest since July 2006.
Bloomberg