Highlights
The U.S. trade deficit in April worsened as exports fell faster than imports. However, there is a glimmer of hope in the import detail. The overall U.S. trade gap grew to $29.2 billion from a revised $28.5 billion deficit the prior month. The April deficit was worse than the market forecast for a $28.5 billion shortfall. Indeed, worldwide demand contracted further as exports fell 2.3 percent while imports slipped 1.4 percent. The widening in the trade gap was seen in both petroleum and nonpetroleum components. The petroleum deficit widened to $15.0 billion from $14.5 billion in March. Meanwhile, the goods excluding petroleum gap grew to $23.9 billion in April from $23.2 billion the month before.

The fall in exports was led by a $1.3 billion drop in industrial supplies, followed by a $1.2 billion decrease in capital goods excluding autos. Consumer goods exports slipped $0.5 billion while the foods, feeds & beverages component rose $0.3 billion.

Imports dropped largely on $0.9 billion less in capital goods excluding autos. Industrial supplies imports fell $0.7 billion despite a $1.0 billion jump in the crude oil subcomponent. The auto component and the foods, feeds & beverages component edged down marginally. The good news, ironically, is that consumer goods imports rose $0.4 billion after a $0.6 billion gain in March. While demand for capital goods and manufacturing inputs is down, the higher import levels for consumer goods suggests that businesses believe that the consumer sector will be rebounding in coming months.

Today's report is not good news for equities as traders will likely focus on the drop in exports which will add to weakness in manufacturing. But the silver lining that many will likely miss was another gain in imports of consumer goods. In currency markets, the wider gap should weigh on the dollar. On the release, interest rates firmed.

Market Consensus Before Announcement
The U.S. international trade gap in March widened to $27.6 billion from $26.1 billion deficit the month before. But the widening was not due to a rise in imports but due to exports dropping a sharp 2.4 percent. Meanwhile, imports slipped 1.0 percent. Oil imports did rise but were offset by other imports falling. The March report paints a picture of contracting demand worldwide. Looking ahead, we may say a widening in the April gap due to higher oil prices boosting overall imports. But there is a good chance that we'll see a further deterioration in both exports and nonoil imports.

2009 Release Schedule

Released On: 1/13 2/11 3/13 4/9 5/12 6/10 7/10 8/12 9/10 10/9 11/13 12/10 Released For: Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct