The U.S. trade deficit
narrowed in March as exports rebounded, but the improvement was probably not
enough to prevent the government from revising down its estimate of
first-quarter growth to show a contraction.
The
Commerce Department said on Tuesday the trade gap shrank 3.6 percent to $40.4
billion, broadly in line with economists' expectations. When adjusted for
inflation, the deficit dipped to $49.4 billion from $49.8 billion in February.
March's
shortfall, however, was a bit bigger than the $38.9 billion that the government
had assumed in its advance first-quarter gross domestic product estimate
published last week.
Economists
said the data implied about a two-tenths of a percentage point reduction to the
first quarter's 0.1 percent annual growth pace. The report came on the heels of
March construction spending and factory inventories data
that also proved weaker than the government had assumed in its advance GDP
report last Wednesday.
"There
is a very high chance that GDP will be revised to show a contraction in the
first quarter, possibly in the neighborhood of minus 0.5 percent," said
John Ryding, chief economist at RDQ Economics in New York.
That would be
the first quarterly contraction in three years.
The
government will publish revised GDP figures later this month. In its initial
report, it estimated trade subtracted 0.83 percentage point from economic
growth, with exports posting their largest quarterly decline in five years.
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