With exports climbing and imports falling, the Commerce Department released a report on Thursday showing a significantly narrower U.S. trade deficit in the month of March.
The Commerce Department said the trade deficit tumbled 15.2 percent to $49.0 billion in March, the lowest level since September. The government reported last week that trade contributed 0.2 percentage point to the first quarter's 2.3 per cent annualised growth pace. "They're buying beans in Canada, in Brazil, mostly Brazil, but very deliberately not buying anything from the U.S".
The import side showed encouraging consumer demand, with passenger vehicles and light trucks up 13 per cent month over month, and consumer products up almost 8 per cent. Economists said the strength reflects Canada's continued strong labour market, as well as the acceleration in wage growth in recent months. Even though the negotiations over China's trade practices hasn't become a full-fledged trade war, it looks like the country has already stopped buying American soy, according to a report from Bloomberg. The politically sensitive goods trade gap with China dropped 11.6 percent to $25.9 billion, which will probably do little to ease tensions between the United States and China. Other notable increases were in imports from the Netherlands and Germany. The unemployment rate is at a 17-year low of 4.1 percent, close to the Federal Reserve's forecast of 3.8 percent by the end of this year. Policy makers will be reassured by a rise in exports and signs of dissipating railway bottlenecks, while the jump in imports implies trade acted as a major drag on first-quarter growth.
US crude CLc1 prices were down 0.50 percent at $67.59 a barrel.
"While the import boom is by itself a headwind to GDP, the associated implications for domestic demand suggest that the economy maintained healthy momentum in March", said Canadian Imperial Bank of Commerce economist Royce Mendes.
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Shadow home secretary Diane Abbot added: "All roads lead back to Theresa May and her tenure as Home Secretary". Afterwards, there were pressing issues to attend to at Marsham House, the Home Office headquarters.
Exports for March reached a record high of $208.5 billion, with increases in many goods and services exports, particularly to China.
The release of the report came as US Treasury Secretary Steven Mnuchin is leading a delegation to China for highly anticipated trade talks.
Several analysts also pointed to the timing of Lunar New Year, which began in mid-February, as a possible source of recent import volatility.
It could take months for the tariffs' effects to emerge clearly in the often-volatile monthly data on US imports.
Imports of goods and services fell 1.8 percent to $257.5 billion, in part as the boost from royalties and broadcast license fees related to the Winter Olympics faded.