MercoPress. South Atlantic News Agency

US trade deficit slackened last March

United States appetite for imports, particularly oil and other fuels, slackened somewhat in March with a surprise trade deficit of 62 billion US dollars, reported the US Department of Commerce.

The 62 billion represent a 5.5% decline from the February deficit of 65.6 billion US dollars. It was the lowest trade gap since August but was still considerably bigger than the 53.7 billion deficit of March 2005. Analysts had expected the deficit to balloon to 67 billion.

Imports of petroleum-based products fell 8.3% to 22.5 billion US dollars in March. The drop in imports could be a reflection of a brief but sharp decline in oil futures contracts prices in February, said Ashraf Laidi, chief currency analyst at MG Financial Group.

"I don't think we should take any comfort considering the pricing developments, which were positive then but deteriorated thereafter" said Mr. Laidi.

In January the trade deficit hit 68.6 billion, the highest for any single month on record. The total US trade deficit for the first three months of 2006 was 196.2 billion. Last year the US trade gap reached the highest level ever: 726 billion US dollars.

The trade gap with China, which has become even more politically sensitive than usual this year as the midterm November elections approach, widened 13% to 15.6 billion US dollars. While imports from China rose 15%, exports also jumped 21% in March.

China reported Friday that its trade surplus with the rest of the world reached 10.5 billion in April, down from 11.2 billion in March but far ahead of the 4.6 billion of a year ago. The Beijing think-tank China Stock Exchange Council predicted the full year surplus would exceed 130 billion US dollars.

On Wednesday, the Treasury Department criticized China for not allowing its currency, the yuan, to float more freely against other currencies but declined to label China a currency manipulator as many Democratic and Republican lawmakers had wanted.

Last year, China revalued its currency allowing it to float against a basket of currencies, rather than linking it at a fixed rate to the dollar. But some US politicians claim the yuan is artificially undervalued, allowing China to keep its export prices low.

Following the Friday US trade report, the dollar fell to its lowest level against the euro and British pound in a year. The Japanese yen also strengthened against the dollar.

However some analysts are predicting that stronger economies in Europe and Asia, and the recent fall in the value of the dollar, could give US exports a boost during the summer.