US trade deficit seems to have risen slightly in April. The trade deficit in goods broadened to USD 57.5 billion from March’s USD 57.1 billion. Consensus expectation was for a larger deficit of USD 60 billion. Nominal imports grew last month; however, the rise was below projections. Meanwhile, the narrower than anticipated trade deficit suggests a more solid real GDP growth in the second quarter. But the slack in consumer goods imports requires attention, said Barclays in a research report.
Certain retail sectors in the country, especially clothing and apparel stores, have registered increasing levels of inventory in recent months. This might result in the deceleration of import demand in the near-term.
Total goods imports, in nominal terms, grew 1.9% m/m in April. It is estimated to have grown 1.5% m/m in real terms. Rise in capital goods of 3.7% m/m helped drive the increase in imports. Imports of nonautomotive consumer goods rose 0.8% m/m; however, they continue to be weak at the start of Q2. Meanwhile, the total exports in nominal terms rose 2.4% m/m and is estimated to have grown 1.9% m/m in real terms.
Industrial supplies and materials’ exports rose 6.1% m/m. But some of the growth possibly shows higher prices of energy and commodity. Meanwhile, exports of auto grew 5.8% m/m, reversing the weakness of March, whereas exports of capital goods grew 0.4% m/m.
“Using import and export prices reported by the BLS, we estimate that the real goods deficit widened to $57.9bn in April, from $57.4bn in March. On net, we now expect a smaller 0.1pp drag from net exports in Q1. This boosted our Q2 GDP tracking estimate by two-tenths, to 2.6%”, noted Barclays.