The March U.S. total trade deficit of $40.44 billion was the lowest in more than a year, and reflected record low petroleum shortfalls in both current and constant dollar terms, and the best month in history for high tech goods exports. Real petroleum exports rose to historic levels as well. The huge American merchandise trade deficit with China fell by the greatest amount since February, 2012 and a 4.43 percent narrowing of the manufacturing deficit was led by a double-digits percent monthly rise in exports.
All the same, the growth of that slice of the trade deficit most strongly affected by trade policy resulted in a 20-plus percent subtraction from the current weak U.S. economic expansion – which translates into $430 billion of lost growth.
Here are selected highlights of the latest monthly (March) trade balance figures released this morning by the Census Bureau:
>A slowing U.S. economy, along with more new records in oil trade and high tech goods trade, finally significantly narrowed America’s trade deficit in March.
>The combined goods and services shortfall of $40.44 billion was the lowest monthly total since February, 2015, and represented a 13.88 percent plunge from last month’s downwardly revised $46.96 billion.
>March’s trade deficit improvement was led by a 3.58 percent monthly drop in overall imports, from a downwardly revised $225.13 billion to $217.061 billion. This 3.58 percent decrease – the biggest such decline since recessionary February 2009’s 4.92 percent – brought America’s overall foreign purchases to their lowest monthly level since February, 2011.
>In turn, these subdued import totals were keyed by new record improvements in U.S. oil trade. The chronic U.S. oil trade deficit sank by 16.04 percent from February’s $3.53 billion to $2.97 billion – an all-time low (based on Census data that go back to 1992).
>U.S. oil imports of $9.44 billion in March were down by 4.52 percent from February’s $9.86 billion, and reached their lowest level since September, 2002 ($9.02 billion).
>March also saw a monthly rise in U.S. oil exports – of 2.36 percent, from $6.32 billion to $6.47 billion. But these levels are well off records.
>America’s oil trade also dramatically improved in inflation-adjusted terms in March. The real oil trade deficit shrank by 8.78 percent on month from $8.83 billion to $8.05 billion – a new all-time low (also based on Census figures dating to 1992). The previous record low was $8.14 billion, set in August, 2014.
>Yet many of these gains stemmed from the second straight month of record constant-dollar oil exports. These shipments hit $9.19 billion in March – 1.77 percent higher than February’s total of $9.03 billion.
>The above developments pushed the year-on-year combined U.S. trade deficit 0.78 percent lower (to $133.29 billion) than 2015’s comparable total ($134.33 billion).
>Goods and services exports fell 0.88 percent in March, from an upwardly revised $178.16 billion to $176.62 billion. This total represents the second worst since June, 2011 ($175.61 billion). Only January’s $176.92 billion was lower.
>Combined exports are now down 5.44 percent year-on-year.
>Combined imports are now down 4.54 percent year-on-year.
>Oil trade trends also significantly influenced America’s merchandise trade. The March goods trade deficit of $58.51 billion was 9.33 percent lower than February’s downwardly revised $64.53 billion. It also represented the smallest goods trade gap since the previous February.
>Goods exports dropped by 1.56 percent in March, from February’s upwardly adjusted $118.67 billion to $116.82 billion.
>This total was the nation’s second lowest since November, 2010 ($114.63 billion). The lowest was January’s $116.77 billion.
>The goods trade deficit is now down 2.77 percent year on year, with exports down 8.65 percent and 6.23 percent.
>The March figures also revealed that, year on year, the U.S. oil trade deficit is down 57.15 percent – from $25.95 billion for the first three months of 2015 to $11.12 billion during the first quarter of this year.
>In inflation-adjusted terms, the oil trade deficit is down 1.63 percent year on year – from $17.23 billion to $16.95 billion.
>Another record set in March was for high tech goods exports – $31.52 billion. (Figures go back to 1989.) That represented a 23.28 percent increase over the February figure.
>Largely as a result, the chronic but volatile U.S. trade deficit in this category fell by 35.06 percent on month, from $5.14 billion to $3.34 billion – the lowest total since last February ($3.13 billion).
>High tech goods imports increased robustly as well – by 13.51 percent, from $30.71 billion to $34.86 billion.
>March was a good month for U.S. services trade, too. The surplus rose 2.85 percent, to $18.07 billion, from February’s downwardly revised $17.57 billion. March’s surplus was the biggest since last June.
>Services exports ticked up by 0.51 percent, from February’s upwardly adjusted $59.49 billion to $59.80 billion. Imports dipped 0.47 percent, from an upwardly adjusted $41.92 billion to $41.73 billion.
>March services exports and imports both represented the third highest monthly totals on record.
>Year on year, however, the services surplus is down 7.41 percent, as exports have fallen fractionally and imports have risen 3.49 percent.
>The March contraction in America’s overall trade deficit and its goods trade deficit was also attributable to the biggest drop in the monthly goods trade shortfall with China in more than four years.
>This chronic bilateral merchandise deficit plummeted from $28.11 billion in February to $20.90 billion. That’s the smallest such figure since February, 2014’s $20.85 billion.
>Moreover, the 25.65 percent sequential decrease was the largest since February, 2012’s 25.86 percent.
>U.S. goods exports to China jumped by 11.23 percent in March – to $8.95 billion from $8.05 billion in March.
>American merchandise imports from China cratered by 17.44 percent in March – from $36.16 billion in February to $29.85 billion.
>The huge and chronic U.S. manufacturing trade deficit decreased by 4.43 percent in March, from $65.89 billion to $62.97 billion. Notably, both imports and exports surged.
>Manufacturing sales abroad rose by 12.38 percent, from $82.53 billion to $92.74 billion. The much larger volume of imports, however, increased by a strong 4.91 percent as well, from $148.41 billion to $155.70 billion.
>Year on year, the manufacturing trade deficit has increased by 3.86 percent through March – from $187.08 billion to $194.30 billion. This growth rate is considerably slower than that of recent years.
>Manufacturing exports year on year are down by 7.11 percent so far, from $273.96 billion to $254.49 billion. The much greater amount of manufacturing imports has fallen so far by only 2.66 percent – from $461.03 billion to $448.78 billion.
>Despite the relatively good March totals generally, a high figure for the inflation-adjusted non-oil goods deficit pushed the trade drag on cumulative recovery-era growth still higher.
>Incorporating the category’s $54.84 billion March trade gap, the expansion of the non-oil trade deficit has now reduced recovery era real growth of $2.1371 trillion (since the second quarter of 2009), by $430.18 billion – or 20.13 percent.
>Since non-oil trade flows are those that are most significantly affected by trade agreements and related policies, this trade deficit’s growth-killing impact considerably weakens the case for Congress ratifying President Obama’s Trans-Pacific Partnership trade deal.