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AFX: US April Trade Gap Widens Modestly As Exports Fall
 
WASHINGTON -(Dow Jones)- The U.S. trade deficit widened modestly in April as exports declined and oil imports continued their recent recovery.

The U.S. deficit in international trade of goods and services increased to $29.16 billion from a revised $28.53 billion in March, the Commerce Department said Wednesday. The March trade gap was originally reported as $27.58 billion.

The April deficit was in line with Wall Street expectations for a $29 billion shortfall.

The trade gap has been narrowing in recent months as the slowing U.S. economy has sapped demand for overseas goods, though it has widened two months in a row on the back of rising oil prices.

Commerce Secretary Gary Locke said the figures "remind us just how challenging the world economic environment is."

In a statement, he said it is important to continue to remove trade barriers and encourage other countries to resist protectionist impulses.

Trade has also remained one of the few supports to the ailing U.S. economy, adding 2.18 percentage points to gross domestic product in the first quarter, despite a 5.7% contraction in the overall economy.

However, trade could become a drag on growth in the current quarter if the current trend holds.

"My guess is that the deficits will worsen in May and June, leading to a modest (second-quarter) subtraction from GDP," said Ken Mayland, an economist at ClearView Economics.

"The era of the declining U.S. trade deficit is over," he said.

Daiwa Securities America economist Michael Moran estimates that if May and June show similar gaps, net exports would subtract about 0.2 percentage point from GDP.

"The influence is likely to be small, but it would represent a shift from the performance in other recent quarters," he said.

U.S. exports in April fell 2.3% to $121.11 billion, the lowest level since July 2006, from $123.93 billion the previous month. Imports decreased, however, to their lowest level since September 2004, falling 1.4% to $150.28 billion from $152.46 billion.

The U.S. bill for crude oil imports in April rose to $13.63 billion from $11.98 billion the month before as oil prices rebounded. The average price per barrel climbed to $46.60 from $41.36 the previous month. Crude import volumes rose to 292.60 million barrels from 289.69 million.

The U.S. paid $17.40 billion for all types of energy-related imports, up from $16.05 billion in March.

Imports of industrial supplies decreased $733 million in April. Food and feed imports fell $73 million. Auto and related parts imports declined $93 million.

Imports of foreign-made consumer goods like clothing and household appliances increased $404 million, while April purchases of foreign-made capital goods such as computer accessories fell $916 million.

As for exports, U.S. sales abroad of consumer goods, including art and stereos, decreased $479 million during April. Capital goods exports fell by $1.08 billion. Auto exports decreased $164 million. Sales of industrial supplies, such as gold and copper, slumped $1.25 billion.

Meanwhile, exports of food, feed, and beverages went up by $303 million.

The U.S. trade deficit with China expanded in April to $16.75 billion from $15.62 billion the month before.

U.S. trade deficits with other major trading partners also widened. The gap with Japan rose to $3.22 billion from $2.61 billion. The deficit with Canada rose to $1.22 billion from $766 million. The U.S. gap with Mexico increased to $4.12 billion from $3.91 billion.

However, the deficit with the euro area decreased to $4.16 billion from $4.49 billion.

Source