The April trade deficit widened to -$29.2 billion from a downwardly revised -$28.5 billion in March. The April figure was just about spot-on with the consensus estimate of -$29.0 billion.
Total exports fell 2.3% to $121.1 billion while total imports dropped 1.4% to $150.3 billion.
The real trade deficit widened slightly to $-39.4 billion from -$39.2 billion in March. The April figure was a bit above the first quarter average of $39.0 billion, so it will factor as a very slight negative in Q2 GDP forecasts for the time being.
Key Factors
The trade report reflects the ongoing economic difficulties around the globe, yet the slight widening in the deficit has the potential to be read by the market as a sign that export demand isn't as depressed as before and could show improvement in the next report given the pickup in confidence and demand that presumably has followed the rally in global equity markets.
The latter point aside, the prevailing message in today's release is that trade activity was still quite depressed in April.
The trade report is most widely watched for trends in the overall trade
balance. But trends in both exports and imports of goods and services bear
watching as well. The export data in particular are important to watch for
indications that a strengthening competitive position at home and/or
strengthening economies overseas are boosting U.S. growth. Imports provide an
indication of domestic demand, but given the severe lag of this report relative
to other consumption indicators, it is not particularly valuable for this
purpose.
The volatility in the monthly trade balance can play an important role in
GDP forecasts. Net exports are a relatively volatile component of GDP, and the
trade report provides the only early clues to the net export performance each
quarter.
