U.S. Trade Activity Picks Up in First Quarter

The U.S. trade gap widened in the first quarter compared to a year earlier as exports and imports rose, suggesting underlying strength in the global economy.

The trade deficit expanded $9.4 billion, or 7.5%, in the first three months of the year compared to the same period a year earlier, the Commerce Department said Thursday. Exports and imports both grew by 7.1%.

Trade slumped slightly at the end of the quarter. The trade gap narrowed by 0.1% in March from a month earlier to a seasonally adjusted $43.71 billion. Economists surveyed by The Wall Street Journal had expected a $44.5 billion trade deficit in March. Exports slipped by 0.9% while imports fell by 0.7%.

Higher trade flows are a sign of economic health because they suggest individuals and companies around the world are able and willing to step up spending.

American producers are benefiting from greater global demand for U.S.-made goods and services. Exports of services reached a record in March, before adjusting for inflation, Thursday's report showed. Exports of goods fell in March compared to February, reflecting lower sales abroad of oil, cars and civilian aircraft, but are rising over a broader period.

Imports fell in March because of reduced spending on civilian aircraft, computers, oil and cars.

Trade figures also carry political implications as President Donald Trump seeks to revamp U.S. trade deals with other countries. The trade gap with Mexico has surged nearly 14% this year compared to the first quarter of 2016, hitting the highest level since November 2007. Imports from Mexico set a record in March.

The deficit with China has grown 1.2% this year compared to the first three months of 2016.

Other reports suggest U.S. firms are benefiting from stronger economic growth around the globe, including in Europe and Asia. The Institute for Supply Management, a trade group, said orders at U.S. factories from customers abroad rose in April to the highest level since November 2013, according to a survey of purchasing managers.

The group said export orders at U.S. service providers climbed quickly in April.

Write to Josh Mitchell at joshua.mitchell@wsj.com and Jeffrey Sparshott at jeffrey.sparshott@wsj.com

(END) Dow Jones Newswires

May 04, 2017 09:13 ET (13:13 GMT)