Lower U.S. demand for crude oil and petroleum products in April helped shrink the nation's balance-of-trade deficit from the previous month, the Commerce Department said Friday, but the trade deficit with China worsened.
The U.S trade gap tapered down about 4.9 percent to $50.1 billion in April. Weakening global demand and growing domestic production are clamping down on the consumption of imported oil and petroleum, Commerce said. The import of goods and services declined 1.7 percent to $233 billion, outpacing comparable exports, which fell 0.8 percent to $182.9 billion after five months of gains.
Declining energy imports could augur an improvement for the U.S. economy. The narrowing in the trade deficit in April is encouraging, especially given that the latest fall in the oil price will reduce the cost of imported oil, Paul Dales, a senior economist at Capital Economics, said in a statement released from London.
With flagging incomes and a widening trade balance on goods and services, the current account deficit jumped 15.7 percent to $137.3 billion in the first quarter from $118.7 billion in the fourth quarter of 2011, the Bureau of Economic Analysis said Thursday. The goods and services deficit expanded at a faster rate (3.2 percent) than income surpluses fell (1.2 percent).
On a year-over-year basis, however, the U.S trade deficit widened by nearly 8 percent from about $40 billion in April 2011. If it continues to grow at this rate, the trade deficit at the end of this year will be $40 billion more than what it was in 2011, said Robert E. Scott, director of trade at the Economic Policy Institute.
The trade deficit with China increased 13 percent to $24.6 billion in April, highlighting U.S. concerns about domestic employment. In fact, the cumulative U.S. trade deficit with China is the largest ever recorded in the world. This deficit has, between 2001 and 2010, cost 2.8 million U.S jobs, according to Steven Capozolla, communications director at the Alliance of American Manufacturing.
Regaining those lost jobs and boosting overall employment might be easier since the free trade deals approved by Congress and the White House last year with South Korea, Colombia and Panama. Increasing U.S exports through these agreements will support additional jobs for American workers who produce made-in-the-US goods and services, said Kerry Humphrey, a spokesperson from the Office of the United States Trade Representative.