US trade deficit widens as recovery gathers pace

Image caption,
US imports have grown as economic recovery continues

The US 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 $40.4bn.

A higher deficit suggests that the pace of corporate and consumer demand is growing following the recession.

However, economists said the outlook for US 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 $188.3bn in March, while exports rose 3.2% to $147.87bn.

The recent weakness of the 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 rose to $7.1bn in March, a 32.7% jump.

Heavy machinery

So far this year, the US deficit is running at an annual rate of $467.2bn, 23.4% higher than last year's imbalance of $378.6bn.

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

The Commerce Department said exports of farm products and heavy machinery were particularly strong in March.

China deficit

The deficit with China rose 2.4% to $16.9bn in March, the highest level since January and the largest trade gap with any country.

US manufacturers are urging President Barack Obama to press Beijing to change its currency strategy.

Companies claim that China's currency manipulation is making US exports more expensive.

But China has rejected any interference in what it regards as a domestic issue.

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