MercoPress. South Atlantic News Agency

April US trade deficit below market estimates

United States trade deficit increased to 63.43 billion US dollars last April from 61.86 billion in March, which was below market estimates of 65 billion, reported the Department of Commerce.

However US trade gap in the fist four months of 2006 reached 252 billion US dollars which means it's in course to exceed the record 716 billion of 2005.

Regarding Latinamerica and the Caribbean the surplus dropped 10.9% last April and stood at 8.6 billion US dollars. In the first four months of 2006, the overall surplus of Latinamerican countries with the US was 30.407 billion US dollars, slightly below the 30.986 billion of last year.

Analysts said that the April figure may help ease some of the negative feeling that has surrounded the dollar in recent months, even if only for a short time.

"It's a pretty good number for the dollar all around," said Clyde Wardle of HSBC. The dollar gained against the euro and the yen on Friday after the US Commerce Department released its trade figures. Most of the trade deficit's widening can be put down to a 1.44 billion US dollars increase in oil costs after crude prices climbed to record levels in April.

The trade gap would have been even bigger had it not been for near-record US exports to China and Canada, but United States also imported more goods from China, leading to an increased deficit of 17 billion US dollars with Beijing alone.

"The trade deficit, along with higher gasoline prices and the flagging housing sector, will slow GDP growth in the second and third quarters" anticipated Peter Morici, trade economist at the University of Maryland. "All of this makes more difficult the challenges faced by Fed Chairman Ben Bernanke".

Earlier this week, Mr Bernanke said that the central bank was worried about the rate of inflation, prompting a global sell-off in equities as investors worried that interest rates would have to rise to keep a lid on price growth.

The European Central Bank raised the basic rate to 2.75% this week and the Fed is expected to adopt a similar attitude, possibly increasing the rate to 5,25% at the Open Market Committee meeting at the end of June.