The trade deficit bounced off of a nine year low, widening to $27.6B in March as imports were propped up by higher oil prices. The widening was less than the consensus had expected. It appears that the contribution from net exports to GDP in the first quarter was better than the BEA had initially estimated prior to the data release.

Higher Oil Prices Turned Around Recent Drop in Imports

• After falling every month since last November, imports finally picked up a bit in March. But rather than signaling a return to robust global trade, this is more reflective of higher oil prices.

• Petroleum goods imports jumped 3.1 percent-not a complete surprise considering oil was below $35/barrel during parts of February, but over $50/barrel during much of March. Imports of non-petroleum goods fell for the seventh straight month.

Global Trade Drying Up

• The real story is much the same as it has been in recent months: global trade is drying up. The IMF now believes global growth will contract in 2009 for the first time since records began in 1970. Combine that with historically tight credit conditions, and you have a recipe for slowing international trade.

• One positive in this report is the new trade balance data should add more than first estimated to Q1 GDP.