U.S. Trade Deficit Drops By 19.1%; Exports Rise By 3.5%

The US trade deficit shrank by 19.1% in April 2022, the most in ten years, as exports hit a new high, indicating that trade could contribute to economic growth this quarter, Lucia Mutikani reported for Reuters.

Photo Insert: Shipments of industrial goods and commodities, which touched a new high amid increases in natural gas, precious metals, and petroleum products, led the overall increase in exports.

The trade deficit dropped to $87.1 billion while exports of goods and services increased 3.5% to an all-time high of $252.6 billion.

"The big drop back in the trade deficit in April suggests that net trade will be a large boost to second-quarter GDP growth," said Michael Pearce, a senior economist at Capital Economics in New York.

After rising at a solid 6.9% rate in the fourth quarter, a record trade deficit slashed 3.23 percentage points from GDP in the first quarter, resulting in GDP shrinking at a 1.5 percent annualized rate. For the past seven quarters, trade has been a drag on GDP. The second quarter's growth is expected to be as high as 4.8 percent on an annualized basis.

Shipments of industrial goods and commodities, which touched a new high amid increases in natural gas, precious metals, and petroleum products, led the overall increase in exports.

Petroleum exports reached a new high of $27.2 billion. Food exports also reached new highs, with the country selling $2.1 billion worth of soybeans. Exports of capital goods rose $1.2 billion to $47.5 billion, the highest level since March 2019, with civilian aircraft shipments up $1.3 billion.

Services exports climbed by $2.4 billion to $76.5 billion, boosted by increases in travel and transportation. In April, goods and services imports declined 3.4 percent to $339.7 billion. Imports were fast increasing as businesses refilled stocks in order to meet robust domestic demand.

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