Trade Deficit Lower Than Expected In April, March Revised Lower

The nation's trade deficit is narrower than expected, at $37.4 billion in April with March revised sharply lower, to $35.5 billion from $40.4 billion. Exports show wide strength in the April data, up 1.5 percent and with particular strength in industrial supplies and autos and including gains for foods, consumer goods as well as capital goods. Imports rose 2.1 percent in the month led, in what is welcome news for business investment, by capital goods which surged $2.5 billion. Industrial supplies and also autos and consumer goods show import gains with the latter two pointing especially to strength in domestic demand.

Petroleum was not a factor in the data with the related gap slipping from $3.2 billion in March to $3.1 billion for the narrowest reading in 17 years. The total goods gap widened to $58.8 billion in the month from $57.4 billion while the services surplus narrowed slightly, to $21.4 billion from $21.9 billion.

Country data show a widening deficit with China, to $24.3 billion in month from $20.9 billion, but narrowing with the EU, to $11.9 billion from $13.1 billion, and with Japan, to $6.2 billion from $6.7 billion.

The narrowing gap is good news for GDP, both for the second-quarter outlook and first-quarter revisions. And the gains for exports and for imports, especially for capital goods, are positives for the domestic outlook.

Recent History Of This Indicator:
The nation's trade deficit is expected to widen slightly in April, to a consensus $41.0 billion vs March's $40.4 billion. Advanced data on goods showed gains for imports, which are a subtraction in the national accounts, that exceeded gains in exports. Still, the gains in both imports and exports are positives for the global outlook, the former pointing to rising foreign demand and the latter to rising domestic demand.