US trade deficit falls as exports increase

THE US trade deficit narrowed sharply in March as exports increased to a record high amid a surge in deliveries of commercial aircraft and soybeans, bolstering the economy’s outlook heading into the second quarter.

While other data on Thursday showed a modest increase in new applications for jobless benefits last week, the number of Americans receiving unemployment aid fell to its lowest level since 1973, pointing to tightening labour market conditions.

Wage growth is also rising, with hourly compensation accelerating in the first quarter. That should help to boost consumers spending after it slowed sharply in the first three months of the year.

The Commerce Department said the trade deficit tumbled 15.2 per cent to $49.0bn in March, the lowest level since September. The trade gap widened to $57.7bn in February, which was the highest level since October 2008.

March’s decline ended six straight monthly increases in the trade deficit. Economists had forecast the trade gap narrowing to $50.0bn in March.

The politically sensitive goods trade deficit with China dropped 11.6 per cent to $25.9bn, which will probably do little to ease tensions between the United States and China.

President Donald Trump has threatened tariffs on up to $150bn worth of Chinese goods.