U.S. Trade Gap Widened 5% in April--Update

By Josh Mitchell and Ben LeubsdorfFeaturesDow Jones Newswires

The U.S. trade deficit widened in April as Americans stepped up purchases of foreign goods such as cell phones and equipment.

The trade gap in goods and services with other nations increased 5.2% from a month earlier to $47.62 billion, the Commerce Department said Friday. Imports grew 0.8% while exports fell 0.3%.

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Economists surveyed by The Wall Street Journal had projected a gap of $46.2 billion for April.

Trade-flow estimates are volatile from month to month, but exports and imports have both risen broadly over the past year as the global economy has gained strength. The value of foreign goods and services imported to the U.S. climbed 7.5% in the first four months of this year compared with the same period a year earlier. Exports--or the value of American goods and services sold abroad--grew 6.1% over that time.

Consequently, the trade gap has widened 13.4% this year from a year ago.

Economists said foreign trade was likely to be a modest drag on overall growth in the second quarter. Even so, "we think the pickup in consumer goods imports likely bodes well for private consumption expenditure," Barclays economist Blerina Uruci said in a note to clients.

The strong dollar may be a factor in the latest increase in the trade gap. When the dollar strengthens relative to other currencies, as it did in recent years, American goods become more expensive while foreign goods become cheaper internationally.

The pickup in imports in April signals Americans and U.S. firms are stepping up spending. Consumers bought more cell phones, antiques and artwork from overseas. Meanwhile, companies boosted spending on capital goods, which hit the highest level in two years, with higher purchases of equipment and computers.

The drop in exports, meanwhile, could weigh on U.S. economic growth if sustained. A big factor was a drop in exports of consumer goods and pharmaceutical preparations. Exports of cars also fell.

The Trump administration has said it wants to shrink U.S. trade deficits with other countries. Economists in general say trade has overall if uneven benefits, including lower prices for consumers.

Write to Josh Mitchell at joshua.mitchell@wsj.com and Ben Leubsdorf at ben.leubsdorf@wsj.com

(END) Dow Jones Newswires

June 02, 2017 12:30 ET (16:30 GMT)