US exports hit record high, trade gap widens

US exports hit a record high in March, buoyed by the weak dollar and strengthening global demand as US trade returned to levels last seen before the global financial crisis. US exports grew 4.6 percent in March to $172.7 billion, surpassing the record set in July 2008 before world trade took a sharp downturn.
The March export rise was the biggest month-to-month gain in 17 years, the Commerce Department said in a report on Wednesday. Despite the big gain, the US trade deficit grew to $48.2 billion in the month, the widest since June 2010, as rising oil prices helped push imports nearly 5 percent higher.
The rise in exports will be welcome news for the White House. President Barack Obama has vowed to double US exports in five years and strong growth in the US manufacturing industry, helped by demand from fast-growing emerging economies such as China, has led the economic recovery. Chris Low, chief economist at FTN Financial, noted US exports have now grown in four of the past five months and are up nearly 15 percent from a year ago.
The closely watched US trade deficit with China narrowed slightly in March to $18.1 billion, as US exports to that country grew faster than imports from the Asian giant. Both US goods and US services exports set records in March, as did two sub-categories - foods, feeds and beverages and industrial supplies. US exports to Canada and South and Central America also set records and exports to the European Union were the highest since July 2008.
A weaker dollar helps US exports by making them cheaper in world markets. The dollar has fallen 5.2 percent against a basket of currencies since the start of 2011. Against the euro, the dollar has been down nearly 7 percent so far this year. Imports grew 4.9 percent to $220.8 billion as the average price for imported oil hit $93.76 per barrel, the highest since September 2008. Oil prices continued to rise in April, but have receded in recent weeks back to early March levels. Pierre Ellis, senior global economist at Decision Economics in New York, said the trade data could provide ammunition for members of the Federal Reserve board that want to tighten monetary policy to curb the threat of inflation.
US imports were the highest since August 2008, just as the global financial crisis was beginning to bite into trade. Imports hit a record $232.1 billion in July 2008, before tumbling sharply over the next six months. US petroleum imports were also the highest since August 2008 and the US petroleum trade deficit was the widest since October 2008. While the US trade deficit with China narrowed in March, the shortfall for the first quarter hit $60.2 billion, putting it on pace to exceed last year's record of around $273 billion.
The United States pressed for a faster rise in the yuan's value to help bring trade into balance, while China said it would continue exchange rate reform at its own pace. So far, there was little sign of disruption to Japan's exports to the United States after the March 11 earthquake and tsunami that caused widespread damage to the country's manufacturing base, including exporters of goods and parts. Separately, a Labour Department report showed US job openings in March were the most in 2-1/2 years, pointing to a firmer tone in the labor market. Job openings rose 99,000 to 3.12 million, the highest since September 2008.