U.S. Trade Deficit Shrinks 3.6%

The U.S. international trade deficit narrowed slightly for March, according to a Commerce Department report (link opens in PDF) released today. 

After clocking in at a revised $41.9 billion for February, the total deficit shrank 3.6% to $40.4 billion for March, almost exactly matching analyst expectations of a $40.5 billion reading. 

Deficits improve in two ways: Exports increase more than imports, or imports decrease more than exports. The first scenario is generally favored over the second, as it more directly shows signs of an internally strengthening economy. March's results show the former, where a $3.9 billion boost in exports outweighed a $2.5 billion increase in imports.

Source: census.gov.   

For March, both services and goods trade contributed to the improvement. The services surplus expanded $0.9 billion to $20.4 billion, while the goods deficit fell $0.6 billion to $60.7 billion.

Looking back over the last year, March's improvement wasn't enough to put it ahead of year-ago levels. In the past 12 months, the deficit has expanded $3.8 billion as imports growth ($13.0 billion) has outweighed exports growth ($9.2 billion).

The U.S. currently enjoys its largest trade surplus for goods with Hong Kong ($2.4 billion), while China enjoys the top side of a $20.4 billion trade deficit.


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