US foreign trade deficit narrows in April, despite drop in aircraft sales
America's trade shortfall with the rest of the world narrowed in April, despite a big drop in aircraft export sales, which economists said pointed to a big contribution to economic activity in the second quarter.
The nation's deficit in its international trade in goods and services shrank by $1.0bn to reach $46.2bn, according to the Department of Commerce, versus the prior month's -$47.2bn of red ink.
Economists had in fact anticipated the shortfall to widen to -$49.0bn.
In particular, the oft-volatile sales of aircraft for export dropped by $2.8bn in comparison to March, partially offset by a $0.5bn in fuel oil sales overseas.
Thus, as Ian Shepherdson at Pantheon Macroeconomics pointed out, so-called 'core' goods exports, excluding those of aircraft and oil that is, jumped by 1.9% month-on-month.
That left exports 14% higher on an annualised basis over the three months to April and versus the previous three months, he said.
Imports on the other hand were up by only 4% over that same time frame and were set to slow - indeed turn negative - in May, as the post-hurricane surge in imports continued to fade, he said.
As a result, according to Shepherdson, foreign trade was set to make a big contribution to the rate of growth in US gross domestic product for the second quarter, possibly boosting it past 4.0% on an annualised basis.
"The non-oil deficit has now almost returned to the level prevailing before the storms. Net trade is set to make a big contribution to Q2 GDP growth, making a 4-plus rate look entirely plausible at this point. We wrote a few weeks ago that Q2 growth could even hit 5%; that's not our base case but it is not outlandish, either."