The US trade deficit contracted in April by the largest on record in dollar terms, reflecting a decline in the value of imports amid the covid lockdown in China while exports rose.
The gap in trade in goods and services narrowed $20.6 billion, or 19.1%, to $87.1 billion, Commerce Department data showed Tuesday. The median estimate from a Bloomberg survey of economists called for a deficit of $89.5 billion. Figures are not adjusted for inflation.
Imports fell in April as factory activity in China fell to its lowest level since February 2020 amid strict lockdowns to curb the spread of covid-19. While manufacturing in the country has since improved somewhat, the measures continue to strain already tenuous global supply chains, especially when coupled with Russia’s war in Ukraine.
The deficit with China narrowed in April by $8.5 billion, the highest in seven years. Imports fell by $10.1 billion, also the most since 2015.
Inflation, which has been high for decades, is expected to weigh on trade this year, with the World Trade Organization cutting its forecast for growth in global merchandise volumes. So far in the United States, that has yet to materialize, judging by the near record amounts of cargo arriving at the ports of Los Angeles and Long Beach in April.
In the first quarter, the widening trade deficit largely explained the economy’s worst performance since the start of the pandemic recovery, with gross domestic product shrinking at an annual rate of 1.5%. Indeed, the value of products that American businesses and consumers have purchased abroad has exceeded purchases of American goods and services by other economies.
The value of imports of goods and services fell 3.4% in April to $339.7 billion, the first decline since July of a broad decline. Exports rose 3.5% to a record $252.6 billion.
U.S. merchandise imports fell from a record high in March, falling 4.4%, the most since April 2020, reflecting lower inbound shipments of consumer goods, industrial supplies, capital goods and equipment. automobiles.
Retailers such as Target and Walmart are trying to get rid of excess inventory, built up in part as consumers shift more of their spending from goods to services. This may portend fewer imports in the future.
On an inflation-adjusted basis, April’s merchandise trade deficit narrowed 14.2% to $116.2 billion.
Blockages in China began to ease on Monday.
Museums, cinemas and gymnasiums were allowed to operate at up to 75% capacity, and delivery drivers could again bring packages to a customer’s door rather than leaving them to be collected at the entrance apartment complexes.
The return to near-normal has applied everywhere in Beijing, except for one district and part of another, where the epidemic has lingered. Schools, which partially reopened earlier, will do so fully on June 13, followed by kindergartens on June 20.
Authorities had carried out several rounds of mass testing and locked down buildings and compounds whenever infections were discovered, to stamp out an outbreak that infected around 1,800 people in six weeks in a city of 22 million. The number of new cases fell to six on Sunday.
The ruling Communist Party remains committed to a “zero-covid” strategy that comes at an economic cost and inconveniences millions, even as many other countries adopt a more relaxed approach as vaccination rates increase and treatments are becoming more widely available.
In Shanghai, a population of 25 million people suffered a citywide lockdown that confined most of them to their apartments or neighborhoods for two months. The city reopened last week, but restaurants remain closed except for delivery and takeout. A neighborhood carried out more mass testing on Monday after finding new cases at a residential complex, which is now closed for 14 days.
Information for this article was provided by Ana Monteiro of Bloomberg News (WPNS) and Olivia Zhang of The Associated Press.