The international trade balance measures the difference between imports and exports of both tangible goods and services. Imports may act as a drag on domestic growth and they may also increase competitive pressures on domestic producers. Exports boost domestic production. Why Investors Care
| Released on 5/9/08 For Mar 2008 | ||||||||||||
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Highlights
The U.S. trade balance in March shrank sharply with imports declining across the board. The overall U.S. trade gap narrowed to $58.2 billion from a revised $61.7 billion deficit in February and was smaller than the consensus forecast for a $60.8 billion deficit. In March, exports slipped 1.7 percent while imports dropped 2.9 percent. Both the oil and the nonoil gap grew smaller. The oil trade gap shrank to $35.2 billion from $37.4 billion the month before while the nonoil deficit narrowed to $36.1 billion in March from $37.3 billion in February. The decline in the trade gap should help nudge first quarter GDP up slightly. But looking ahead, the drop in imports suggests that businesses are recognizing that the economy is weak.
The dip in exports was broad-based but led by the volatile capital goods component with swings typically reflecting changes in when aircraft are shipped. A rebound in exports in April is likely based on this component detail and a continued weak dollar. The drop in imports was led by autos and industrial supplies with capital goods and consumer goods also showing sizeable declines.
Year-on-year, overall exports were up 15.5 percent in March after 20.6 percent in February while imports were up 7.1 percent, following being up 16.4 percent in February.
Overall, today's report is favorable to the dollar and lower bond rates but equities may be uncertain over which way to go other than anything supporting the dollar is likely favorable.
The U.S. international trade gap has been buffeted by swings in oil prices and most recently by bad guesses by U.S. businesses on the strength of the consumer. The U.S. trade balance in February surprisingly worsened, growing to $62.3 billion from a $59.0 billion shortfall in January. For the latest month, exports rose 2.0 percent while imports jumped 3.1 percent. Also unexpectedly, the oil gap narrowed while the nonoil gap expanded sizably. The petroleum gap shrank to $32.5 billion from $35.3 billion in January. The nonoil trade gap widened to $37.8 billion from $32.5 billion the month before, boosted by a jump in imports for automotive and consumer goods -- where demand is soft. For March, we are likely to see a reverse of some of February's components as oil imports are likely to be boosted by higher prices while nonoil imports could slow to offset rising inventories. However, the slowing in nonoil imports may take one or two months longer as there is a long lag between orders for imports and their actual entry into U.S. ports and into the data.
International trade balance Consensus Forecast for March 08: -$60.8 billion
Range: -$64.5 billion to -$58.0 billion
![[Chart]](chart.gif)
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Exports grow when foreign economies are strong. The weaker the foreign exchange value of the dollar, the less expensive goods and services are to foreigners, and this also helps spurt export activity. Imports grow when U.S. economic growth is robust. Imports are also spurred by a strong foreign exchange value of the dollar. |
![[Chart]](chart_1.gif)
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The international trade balance has posted a deficit almost continuously since the 1980s. Any trade deficit is a drag on U.S. GDP growth, but a smaller deficit adds to growth, while a larger deficit decreases GDP growth. |
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