US goods trade deficit for March reached USD 56.9 billion, as compared to the anticipated deficit of USD 62.8 billion, noted Daiwa Capital Markets. However, the fall in deficit does not give an indication of strength as the shift signifies a steep fall in imports of 4.3%. Exports declined 1.2%.
The fall in exports countered February’s gains and left slight net change in the last two months, providing a signal of stabilization in the downward trend which started in the beginning of 2015, noted Daiwa Capital Markets. On the contrary, the steep fall in imports emphasized the downward trend. Most of the decline in imports possibly shows weakness in real terms, according to Daiwa Capital Markets.
The trade data has vital impact on the US economic growth in Q1. If narrowing of March’s trade deficit is assumed to show real flows, the anticipation of real goods deficit in Q1 indicates marginal broadening from the deficit in Q4 2015, said Daiwa Capital Markets. If services surplus indicates slight alteration, net exports are expected to limit the first quarter economic growth to a certain extent.
“Weak imports suggest that we should nudge our estimates of consumer spending and business investment lower, but we also would expect GDP growth to be closer to 1.0 percent rather than the 0.5 percent we had been expecting”, said Daiwa Capital Markets.
The material has been provided by InstaForex Company – www.instaforex.com