April’s Trade Deficit Drops More than Expected

Washington, DC, June 8, 2007–The trade deficit narrowed more than forecast in April, falling 6.2 percent, according to the Commerce Department. It was the largest drop in six months, falling to $58.5 billion, from a revised $62.4 billion in March. The gap narrowed even as the deficit with China jumped.

Expanding economies abroad and a cheaper dollar are boosting demand for American-made goods, helping to spur a rebound in manufacturing that will sustain the expansion. A wider trade gap last quarter contributed to the slowest pace of growth in four years.

Economists were expecting a narowwinf in the deficit to $63.5 billion.

In April, exports rose 0.2 percent to a record $129.5 billion, as sales of foods, plastics and consumer goods such as jewelry improved.

Imports of goods and services dropped 1.9 percent in April, to $188 billion from $191.6 billion. Demand for consumer goods from abroad slumped to $38.9 billion, from March’s $40.4 billion. Eighty percent of the drop reflected a decrease in pharmaceuticals, a category that economists say has shown much volatility in the last few months.

Oil imports fell to $24.9 billion, from $25 billion a month earlier, as a drop in volume offset higher prices.

The trade gap with China widened to $19.4 billion, the highest since January, from $17.2 billion in March. So far this year, the gap is up 19 percent compared with 2006. The deficit with China reached a record last year for a fifth straight time.