BY:JEFFREY SPARSHOTT | 6/3/15 at 10:18 am| Source: WALL STREET JOURNAL
The U.S. trade gap narrowed in April as the effects of a West Coast port slowdown faded, easing one of the biggest drags on economic growth during the opening months of the year.
The trade deficit contracted by 19.2% to a seasonally adjusted $40.88 billion in April, the Commerce Department said Wednesday. That was the sharpest drop in more than six years, continuing a pattern of big swings brought on by the port dispute.
Economists surveyed by The Wall Street Journal had forecast a deficit of $44.1 billion.
The big improvement could boost gross domestic product, the broadest measure of economic output, in the second quarter of the year. Net trade figures were a big drag in the opening months of 2015.
“We may have to wait another month or two to be sure that we are back to fundamental levels, but the April reading suggests that the trade sector should be a small positive for GDP in Q2,” Stephen Stanley, chief economist at Amherst Pierpont Securities, said in a note to clients.
The trade deficit ballooned to the highest level in more than six years in March, when a backlog of goods rushed through West Coast ports after a labor dispute was resolved. While port traffic now appears back to normal, trade figures may still be somewhat distorted.
In April, imports dropped 3.3% to $230.78 billion. Exports increased 1% from March to $189.91 billion.
The March trade deficit was revised to $50.57 billion from an initially reported $51.37 billion.
This year’s volatile import and export figures worked out to an overall drag on the economy in the opening months of 2015.
In the first quarter of the year, GDP contracted 0.7%, the Commerce Department said in a separate report last week. A surge in imports and falling exports subtracted 1.9 percentage points from the headline figure. As measured by GDP, exports are a positive for economic growth, while imports are a negative.
Some economists expect that to reverse or at least moderate in the second quarter.
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