The U.S. April trade balance was an oil and China story. Rising prices and low inventories forced up energy imports, but there is also underlying demand for consumer products, and the combination left the April trade balance at a huge $60.9 billion deficit, an erosion that more than wiped out March’s modest improvement.
Imports surged $9.4 billion as oil and related products jumped $5.4 billion, autos advanced $1 billion as a parts strike ended, and consumer goods gained $1.25 billion.
Exports rose $5.0 billion on the back of a $769 million gain in civilian aircraft and a $0.8 billion rise in “other” machinery.
The Commerce Department pointed out the April oil deficit was $34.5 billion, the second highest on record. The worst was posted in January 2008.
Both the price and volume of oil imports surged to records, so the move is really an energy story. The real trade balance is about 5% better than the first-quarter average. This will add about 0.1 point to the gross domestic product. One reason is that oil prices got deflated and the U.S. exported more real goods.
Trade by country data showed the unadjusted balance with China was negative $20.2 billion after negative $16.1 billion in March, Japan was negative $7.6 billion after negative $7.5 billion, and OPEC was a record negative $15.6 billion after negative $14.1 billion.
The trade balance with Canada was negative $7.6 billion — the highest since January 2006 — up from a negative $6.4 billion. This probably shows the effects of importing energy from a close neighbor.
The Commerce Department also released the 2007 annual trade revision showing the full year’s balance at negative $711.6 billion. That averages to about negative $59 billion a month, about the same pace as during the first four months in 2008, suggesting the trade balance is not getting much worse.
— Market News International