The U.S. trade deficit widened more than forecast in March as higher volume of foreign oil drove the biggest increase in imports in more than four years.
The deficit rose 10.4 percent to $63.9 billion, the Commerce Department said yesterday. Imports and exports were both the second-highest on record.
The U.S. imports two-thirds of its oil, and the biggest rise in crude prices since June is offsetting the benefit to U.S. exports from a weaker dollar.
"We were paying sharply more in March for imported oil, and, frankly, that's only going to contribute to a lot more red ink in April," said Stuart Hoffman, chief economist at PNC Financial Services Group, of Pittsburgh.
The trade shortfall with China narrowed to $17.2 billion in March from $18.4 billion a month earlier. Imports from China were the lowest since May 2006, while exports to China were a record.
The trade picture with the Asian nation "is still a big mess," said Peter Morici, an economics professor at the University of Maryland. "There's not going to be much improvement."
Through the first three months of the year, the deficit with China climbed to $57 billion from $47.3 billion in the same period a year earlier, and it accounted for almost a third of the overall gap in March.
The wider trade gap in March probably will lead the government to revise down its estimate of first-quarter economic growth. Economists at Morgan Stanley forecast that revised figures will show the economy grew 0.9 percent in the first three months of the year, compared with the government's advance estimate of 1.3 percent issued last month.
"We saw a big increase in oil imports, but, in general, growth in the U.S. is slowing and we should see import growth moderating," said Jay Bryson, global economist at Wachovia Corp. in Charlotte, N.C. "As we look forward, trade should be less of a drag because of global demand for U.S. exports."
Imports of goods and services rose 4.5 percent in March, the biggest increase since November 2002, to $190.1 billion. Imports of industrial supplies, which include petroleum, rose to $49.1 billion from $44.1 billion.
Imports of petroleum products rose to a seasonally adjusted $24.6 billion from $20.9 billion a month earlier.
Exports rose 1.8 percent to $126.2 billion in March from $124 billion a month earlier, led by record sales of industrial supplies and autos.