The report from the US Commerce Department on Tuesday suggested no major impact on trade flows from the US-backed war with Iran, which has disrupted shipping in the Strait of Hormuz. Tariffs also appeared to be doing little to curb imports.
Businesses ramping up spending on artificial intelligence helped to lift capital goods imports to a record high in April.
“Soaring oil exports are helping to narrow the US trade gap, with tariffs playing a more minor role in slowing imports,” said Sal Guatieri, a senior economist at BMO Capital Markets. “Though early in the quarter, this suggests some upside risk to second-quarter GDP growth estimates.”
The trade gap contracted 1.2 percent to US$55.9 billion, the Commerce Department’s Bureau of Economic Analysis and Census Bureau said. Data for March were revised lower to show the deficit at US$56.6 billion instead of the previously reported US$60.3 billion.
Economists polled by Reuters forecast the trade deficit would shrink to US$56.1 billion in April.
Exports increased 2.6 percent to US$327.1 billion, a record high. Goods exports surged 4.1 percent to a record US$221.3 billion. Petroleum exports increased to a record high of US$36.7 billion from US$27.6 billion in March, driven by higher volumes and oil prices tied to the Middle East conflict. The US is a net oil exporter.
Crude prices have shot above US$100 per barrel since the war started in late February. The increase in petroleum products, including crude oil, pushed exports of industrial supplies and materials to a record high of US$89 billion.
“The good news is that the trade picture is moving into better balance at the start of the second quarter… but the bad news is the export growth looks uncertain, as much of it appears to be the result of higher energy prices from the Iran conflict,” said Christopher Rupkey, chief economist at FWDBONDS.
Exports of capital goods increased US$4 billion to a record high of US$70.3 billion amid strong gains in computers and civilian aircraft. Consumer goods exports increased US$1.7 billion.
The increase in overall exports outpaced imports, which rose 2.0 percent to US$383 billion in April. Goods imports advanced 2.1 percent to US$304.9 billion. They were lifted by a US$7 billion increase in capital goods, mostly computers, semiconductors and telecommunications equipment, reflecting the AI spending spree.
But imports of industrial supplies and materials fell US$0.9 billion as petroleum products volumes dropped.
The overall goods trade deficit contracted 2.8 percent to US$83.7 billion. When adjusted for inflation, the goods trade gap narrowed US$1.5 billion, or 1.8 percent, to US$84.3 billion. (Reuters)
