The Bureau of Economic Analysis and the Census Bureau reported that the U.S. trade deficit grew from $45.4 billion in February to $51.8 billion in March. While both exports and imports rose in the month, imports were up 5.2 percent, well offsetting the gains in exports. The March figures followed the narrowing of the trade gap in February.
Looking specifically at goods exports, they rose from $127.9 billion to $132.7 billion – a record level. Strength was seen across-the-board, with the largest increases in industrial supplies and materials (up $2.4 billion) and capital goods (up $1.2 billion). The trade deficit for goods widened for the month, with goods imports up from $189.0 billion to $200.3 billion – also a record. The biggest gains among goods imports were capital goods (up $3.5 billion), consumer goods (up $3.3 billion) and industrial supplies (up $2.5 billion).
The trade deficit for petroleum widened, from $27.6 billion to $28.6 billion. The larger contributor to the widening of the overall trade deficit was non-petroleum sources. The non-petroleum goods deficit expanded from $32.8 billion to $38.0 billion.
Unlike last month’s figures, which showed slowing exports and imports on a country-by-country basis, both grew in March. This suggests some renewed – albeit very modest – growth globally, producing a more limited expansion in exports. The result was a widening of the trade deficit in a whole host of countries, particularly in Europe and China. In each case, the increases in exports were offset by faster growth in imports. The trade deficits in China and Europe were $21.7 billion and $10.0 billion, respectively.
The good news in this report is that exports experienced strong growth for the month. Manufactured goods exports rose from $81.6 billion in February to $93.7 billion in March (not seasonally adjusted). Part of this rise reflects the weaker figures in February, but it also shows that manufactured goods exports remain a bright spot. Recent survey data, from the Institute for Supply Management and others, show an uptick in new export orders moving forward – a good sign.
It also shows that import growth has been expanding at a faster rate, pushing the trade deficit wider. Recent developments in Europe will serve to exacerbate this, slowing our international sales to this important market and helping to dampen global GDP growth. Manufacturers need a stronger global marketplace to propel growth and expand their businesses, especially with exports becoming increasingly more important to the bottom line.
Chad Moutray is chief economist, National Association of Manufacturers.