U.S. goods trade deficit widens in March, suggests slowdown in economic activity in Q1

The U.S. March advanced goods trade deficit broadened modestly to USD 64.8 billion from February’s deficit of USD 63.9 billion. This is consistent with the consensus expectations. The goods exports dropped 1.7 percent on a sequential basis in March, owing to large falls in automotive vehicles, consumer goods and industrial supplies that fell 7.1 percent, 3.9 percent and 5 percent. These declines countered modest gains recorded elsewhere.

Excluding these declines, capital goods exports also rose modestly by 1.8 percent, while other core goods exports rose modestly higher on the month. Both imply greater strength in equipment spending as compared to assumptions, noted Barclays.

Meanwhile, imports of goods also dropped in the month, falling 0.7 percent year-on-year following a decline of 2.1 percent recorded in the prior month. Softness in imports was widespread with falls in food and beverage, capital goods, industrial supplies and consumer goods countering rises elsewhere.

Consumer goods imports dropped in February and March after rising strongly in January. This is in line with other data that imply a slowdown in consumer spending in the first quarter. Moreover, capital goods imports had increased for five consecutive months through February, in line with other data indicating acceleration in fixed investment in late 2016 and the first quarter of 2017. The goods trade data for March imply that certain moderation in this trend might be in store for the second quarter, stated Barclays.

In all, some of the trade data is expected to be impacted negatively by residual seasonality, but even accounting for this, the report is consistent with other data that suggest a slowdown in the economic activity in the first quarter, added Barclays.

At 16:00 GMT the FxWirePro's Hourly Strength of US Dollar was slightly bullish at 74.0471. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex