Friday, June 8, 2007

US trade gap falls sharply on weak dollar

Rhys Blakely

Greenback weakness helps to lift US exports to record levels as Americans cut back on purchasing imported goods
The problematic US trade deficit posted a steeper-than-expected fall in April, as a weak dollar helped to lift exports to a record level and Americans sharply cut spending on imports, the Commerce Department said.

Economists said that the deficit decline, to $58.5 billion (£30 billion) in April from, $62.4 in the previous month, should boost the US economy in the second quarter and lessen the chance of a cut in US rates.

The 6.2 per cent fall in the trade gap, to its lowest level since February, was the most pronounced since October and wrong-footed analysts, who had forecast an April figure of about $63.5 billion.

The fall was caused by a record level of exports, at $129.5 billion, up 0.2 per cent from a month earlier, coupled with a strong 1.9 per cent drop in imports, to $188 billion dollars.

For some time analysts have predicted that the weak dollar eventually would reduce the US trade deficit by making American exports more competitive and imports more expensive for the consumer.

The March deficit was revised lower to $62.4 billion from an initial estimate of $63.9 billion.

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