U.S. advance goods trade deficit narrows more than expected in March

The U.S. advance goods trade balance came in above expectations in March. The goods trade deficit narrowed by nearly USD 8 billion to USD 68 billion, as compared with consensus expectations of a deficit of USD 75 billion.

Goods exports grew 2.6 percent sequentially, while imports fell 1.8 percent month-on-month. Exports were stimulated by capital goods and, to a lesser extent, industrial supplies. The fall in imports was driven by consumer and capital goods; the former was down 1.5 percent sequentially while the latter dropped 2.8 percent. The advance trade report also comes with information on wholesale and retail inventories.

Retail inventories were much weaker than the projection, while wholesale inventories were slightly consistent with projections, noted Barclays in a research report.

Overall, the reports on durable goods orders, advance trade in goods and inventories contain countering effects. Subdued shipments and weaker inventory accumulation were drags on the GDP tracker while the surprise narrowing in the goods balance boosted the estimated contribution from trade.

“On net and after rounding, the data push our Q1 GDP tracking estimate higher by 0.3pp, to 1.8 percent, from 1.5 percent previously. Hence, we see some upside to our official forecast of 1.5 percent (q/q saar) for the BEA’s advance estimate of Q1 GDP, which will be released this Friday”, added Barclays.

At 19:00 GMT the FxWirePro's Hourly Strength Index of US Dollar was highly bullish at 135.316. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex

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