- Chris Low, chief economist at FTN Financial
The US trade deficit ballooned in March to the highest level in six years, driven by a record increase in imports as commercial activity resumed at West Coast ports after a resolution to labour disputes. The gap increased 43.1%, the biggest jump in 18 years, to $51.4 billion, the largest since October 2008, the Commerce Department said. Exports rose 0.9% to $187.8 billion, while imports surged 7.7% to $239.2 billion. Last week data showed that the overall economy grew a tiny 0.2%. A disappointing trade deficit was already estimated to have slashed 1.25 percentage points from first quarter GDP. Nevertheless, the March data could send GDP into negative territory. Yet, economists expect a rebound in growth in the current quarter to around 2%, accelerating to a 3% average in the second half of the year. Rising employment is predicted to boost stronger consumer spending, which should help offset weak export growth.
A separate report showed activity in the US non-manufacturing sector unexpectedly accelerated in April. According to the Institute for Supply Management, the corresponding index came in at 57.8 last month, up from 56.5 in March. The gauge remained in expansion territory, above the 50-point mark, for the 63rd consecutive month.
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