U.S. March Trade Deficit Narrowed To $58.2B

Washington, D.C. (AHN) - U.S. March trade deficit narrowed more than expected led by the weakening dollar, reduction in the demand for imported goods including oil and increased exports of machinery and food.

According to the Commerce Department report released on Friday, the deficit contracted to $58.2 billion, as imports dropped by the most in more than six years.

The market analysts, before the report on the March U.S. trade gap was released, expected it to narrow to $61.3 billion from $62.3 billion in February.

The drop in the trade deficit for March by 5.7 percent, revising the February's drop to $61.71 billion, led by the unexpected 2.9 percent decline in imports to $206.7 billion, compared to $212.82 billion in February.

"The report did not reflect well on the health of the underlying economy given that it was largely based on imports falling more than exports," Russell Price, senior economist at H&R Block Financial Advisors in Detroit, told Bloomberg.

The exports in March also dropped by 1.7 percent to $148.51 billion, compared to $151.10 billion the previous month.

Crude oil imports in March increased to $25.03 billion, compared to $24.28 billion spent in February, led by the record setting oil prices in the past few months.

The current prices could affect the future reports on deficit as the crude oil for June delivery traded to another record level above $125 a barrel mark in New York on Friday.

The surge was added over the rising concerns about the potential decline in the U.S. stock piles, negative sentiment amongst traders and rising cost of gasoline as well as food production.

Oil climbed to $125.98 a barrel, before it retreated to $125.55 a barrel or $1.86 higher on Friday morning. Oil futures have already climbed around $10 this week.

In currency trading, the U.S. dollar was trading hands at 103.10 yen per dollar or down by 0.6 percent, while the Australian dollar dropped by 0.3 per cent to $0.9410 on Friday.

The U.S. currency was at $1.5447 per euro at before the market opened in New York, compared to its trading at $1.5393 late yesterday.

In other sectors, industrial supplies imports fell to $2.05 billion in March, followed by $2.09 billion drop in auto and related parts imports.

Amid rising inflation as well as food crisis around the world, food and feed imports declined to $87 million.

The U.S. trade deficit with China slumped in March to the lowest level in two years to $16.1 billion led by the rise in the exports of $6.35 billion.