Record imports widen US trade gap

The US trade gap widened sharply in March, driven by surging oil and Chinese imports that suggested solid demand in the modestly growing economy, official data showed Thursday. The Commerce Department reported the US trade gap widened to $51.8 billion in March, led by a five percent surge in imports. The March trade shortfall was slightly bigger than analysts' average estimate of $50.2 billion. But analysts pointed to the broad-based rise in imports as a positive signal of momentum in the world's largest economy, where consumer spending accounts for about 70 percent of activity. "Imports have risen in four of the past five months, an indication of sturdy domestic demand," said Ryan Sweet at Moody's Analytics. Robert Brusca, chief economist at FAO Economics, agreed. "The trade number now puts last month's weak import figure behind us and makes it look more like domestic demand is growing," Brusca said. The February gap was revised lower to $45.4 billion from a first estimate of $46.0 billion. Choppy trade at the beginning of the year was mainly due to China's lunar new year celebrations, which dramatically lowered Chinese imports to the United States in February. Excluding China, the number-one exporter to the United States, the March trade deficit would have been more stable. Petroleum imports also were volatile in the first quarter: less than $30 billion in February and more than $36 billion in January and March. US trade in March set new records, the Commerce Department said. Imports hit an all-time high of $238.6 billion, eclipsing record exports of $186.8 billion. US goods and services exports through the first quarter of 2012 were up 8.2 percent or $41.6 billion from the same period of 2011 to reach $549.2 billion. The March number marked the fourth consecutive month of export growth. "This month's data show that US exports have continued to increase this year, despite some tough economic conditions abroad, confirming the historic progress we are making on the path to achieving President (Barack) Obama's goal of doubling exports by the end of 2014," US Commerce Secretary John Bryson said in a statement. The trade chief noted export growth had supported an additional 1.2 million American jobs since 2009. Exports have been a bright spot in the struggling US recovery following the 2008-2009 Great Recession that left unemployment painfully high, but may face challenges in the face of a global slowdown, analysts said. "This report suggests that trade may now be a plus for growth in the first quarter of 2012," said Gregory Daco at IHS Global Insight. "However, it is important to remember that the US is not immune to a sharper global deceleration should the European situation deteriorate sharply, or China experience a hard landing." The US goods trade deficit widened mainly with the Europe Union, China and OPEC countries. The United States posted record goods exports to Canada, its largest trade partner, and imported goods from its northern neighbor at the highest level since September 2008. The gap widened to $3.06 billion. Goods trade with the European Union -- in both imports and exports -- also set record highs. But the politically sensitive gap with China ballooned to $21.67 billion from $19.36 billion in February. Critics accuse China of keeping its yuan currency undervalued to make its exports cheap, gaining a trade advantage. The Obama administration has pressed the Chinese government to allow the yuan to appreciate. While Beijing has made recent progress in widening its currency trading ban, the administration says more needs to be done to level the playing field in international trade. The US trade deficit is now hovering around the $45 billion level seen in mid-2011, after falling to $43.1 billion in October. Since then, it has widened substantially under the effect of rising oil prices.