April’s Trade Deficit Drops More than Expected

Washington, DC, June 8, 2007--The trade deficit narrowed more than forecast in April, falling 6.2 percent, according to the Commerce Department. It was the largest drop in six months, falling to $58.5 billion, from a revised $62.4 billion in March. The gap narrowed even as the deficit with China jumped.

Expanding economies abroad and a cheaper dollar are boosting demand for American-made goods, helping to spur a rebound in manufacturing that will sustain the expansion. A wider trade gap last quarter contributed to the slowest pace of growth in four years.

Economists were expecting a narowwinf in the deficit to $63.5 billion.

In April, exports rose 0.2 percent to a record $129.5 billion, as sales of foods, plastics and consumer goods such as jewelry improved.

Imports of goods and services dropped 1.9 percent in April, to $188 billion from $191.6 billion. Demand for consumer goods from abroad slumped to $38.9 billion, from March's $40.4 billion. Eighty percent of the drop reflected a decrease in pharmaceuticals, a category that economists say has shown much volatility in the last few months.

Oil imports fell to $24.9 billion, from $25 billion a month earlier, as a drop in volume offset higher prices.

The trade gap with China widened to $19.4 billion, the highest since January, from $17.2 billion in March. So far this year, the gap is up 19 percent compared with 2006. The deficit with China reached a record last year for a fifth straight time.