US trade deficit narrows as imports slide

The US trade deficit hit its lowest level in 16 months in March as imports fell the most in seven years.

The trade deficit narrowed by $6.5bn to $40.4bn, marking the smallest gap since November 2014 and a little better than economists’ expectations for a deficit of $41.2bn.

March exports came in at $176.6bn, down $1.5bn from February, while imports were down $8.1bn from February at $217.1bn.

Capital Economics said: “The narrowing in the monthly deficit was driven by a massive 3.6% m/m drop back in imports, which itself was in largely due to a massive 9.9% m/m decline in consumer goods imports. Before we start panicking about a collapse in US domestic demand, however, it’s worth noting that the slump in March followed an equally suspicious looking 7.4% m/m surge in consumer goods imports in February.

“The problem is that US trade statistics do a very poor job of adjusting for the moving date of the Lunar New Year Holiday in China, which is where a lot of these consumer goods imports are coming from.”