Exports and Imports Improved in March
Total exports increased 2.1 percent in March with goods improving 2.8 percent, while services rose by only 0.4 percent. Capital goods exports were up $2.1 billion in March, while industrial supplies and materials increased $0.9 billion. In addition, automotive vehicles, parts, & engines improved $0.6 billion, while other goods increased $0.3 billion and foods, feeds & beverages increased $0.1 billion. The only sector that saw a decline compared to February was consumer goods, which declined $0.3 billion. The increase in exports was welcomed news after the drop of 1.3 percent reported in February and the paltry 0.6 percent gain recorded during the first month of the year. However, this improvement in exports will not be enough to help brighten GDP for the first quarter of the year.
In contrast, total imports of goods and services increased 1.1 percent following a flat reading in February. Imports of goods were up 1.6 percent in March, while imports of services rose 1.7 percent. Imports of consumer goods increased $1.2 billion, foods, feeds & beverages increased $1.0 billion, capital goods improved $0.9 billion and other goods increased $0.8 billion. Industrial supplies & materials was the only sector whose imports were lower, falling by $0.5 billion in March. Meanwhile, automotive vehicles, parts & engines were essentially flat.
Some of the increase in imports of goods in March was due to a higher volume of petroleum imports. The volume of petroleum imports increased 5.9 percent in March after plunging 17.2 percent in February. However, the increase in imports was also related to the price per barrel of petroleum, which also increased, this time by $2.38 per barrel after increasing $1.32 in February. This was the second consecutive monthly increase for the price of petroleum after three consecutive declines. The second biggest reason why imports increased in March was a 10.8 percent increase in food and beverages.
Net Trade Improved, but Not Enough
The U.S. trade deficit narrowed to $40.4 billion in March after posting a downwardly-revised deficit of $41.9 billion in February. However, the March number was still higher than what the Bureau of Economic Analysis (BEA) had estimated when releasing GDP results for the first quarter of the year. This means that if all of the other components of GDP remained the same, which is a highly unlikely event, we continue to expect trade to modestly detract from real GDP growth in the first quarter.
Wells Fargo