MercoPress. South Atlantic News Agency

US Trade Deficit Jumps in March with Imports Underlining Recovery

Exports of farm produce and heavy machinery were strong in March

United States trade deficit rose to a 15-month high in March as rising imports underlined the economy's recovery. Figures from the Commerce Department showed the gap between imports and exports rose 2.5% to 40.4 billion US dollars.

A higher trade deficit suggests that the pace of corporate and consumer demand is growing, following the recession. However, economists said the outlook for United States exports was curtailed by Europe's debt crisis, where latest figures show slow economic growth. Imports of goods and services were up 3.1% to 188.3 billion in March, while exports rose 3.2% to 147.87 billion.

The recent weakness of the US dollar helped US manufacturers boost exports. However, the economic crisis in Europe could hinder demand and lead to a strengthening of the dollar. “The outlook for exports has been dampened by the fiscal crisis in Europe, which has reduced the prospects for overseas activity,” said Paul Dales, senior economist at Capital Economics.

The 16 European states in the Eurozone—which include struggling Greece—account for 15% of US exports. The deficit with the 27-nation European Union increased to 7.1 billion in March, a 32.7% jump. So far this year, the US deficit is running at an annual rate of 467.2 billion, 23.4% higher than last year's imbalance of 378.6 billion.

The increase in imports was led by a 25.5% rise in crude shipments, which rose to 22.3 billion in March. Although the price of oil has risen, so has the volume of US imports.

The United States Department of Commerce said exports of farm products and heavy machinery were particularly strong in March. The deficit with China rose 2.4% to 16.9 billion in March, the highest level since January and the largest trade gap with any country.