US trade deficit swells to record in March as goods imports surge

Bloomberg

The US trade deficit widened to a record in March, reflecting a surge in imports as companies relied on foreign producers to meet solid domestic demand.
The gap in goods and services trade grew 22.3% to $109.8 billion, Commerce Department data showed. The median estimate in a Bloomberg survey of economists called for a $107.1 billion deficit. The figures aren’t adjusted for inflation.
In the first quarter, the widening of the trade deficit largely explains the economy’s worst performance since the pandemic recovery, with gross domestic product shrinking at a 1.4% annual pace. That’s because the value of products American businesses and consumers bought from overseas outpaced purchases of US goods and the
services by other economies.
Net exports subtracted 3.2 percentage points from first-quarter GDP, government figures showed last week.
An improvement in the trade shortfall any time soon will be difficult as US demand exceeds economic activity in many other nations. Severe lockdowns in China to curb the spread of Covid-19 further complicates the trade picture. Activity at some ports slowed sharply, further straining already-tenuous global supply chains.
The value of imports of goods and services rose 10.3% in March to $351.5 billion and exports increased 5.6% to $241.7 billion. Both values were records.
US merchandise imports grew 12% to a record $298.8 billion, reflecting a surge in the value of industrial supplies that include petroleum. Energy prices rallied in the month after Russia’s invasion of Ukraine. Imports of consumer goods, capital equipment and automobiles also increased. On an inflation-adjusted basis, the March merchandise-trade deficit widened 18.9% to a record $137.8 billion.

US companies added 247,000 jobs in April
US companies added in April the fewest jobs in the pandemic recovery, underscoring the persistent challenges faced by small firms to increase headcount in a tight labour market.
Businesses’ payrolls increased by 247,000 last month, after a revised 479,000 gain in March, according to ADP Research Institute data. The median estimate in a Bloomberg survey of economists called for a 383,000 advance.
Businesses with 500 or more employees posted solid hiring gains, but those with less than 50 lost 120,000 jobs in April, the worst in two years.
“While hiring demand remains strong, labor supply shortages caused job gains to soften for both goods producers and services providers,” Nela Richardson, chief economist at ADP. “As the labour market tightens, small companies, with fewer than 50 employees, struggle with competition for wages amid increased costs.”
The weaker-than-expected advance suggests firms are making little progress filling a record number of job openings despite recent wage increases. Many businesses still desperately want to hire more workers, but a depressed participation rate continues to limit further growth in the employment.
The figures precede the government’s monthly jobs report on Friday, which is currently forecast to show private payrolls increased by 390,000 in April. The ADP figures don’t always follow the same pattern as the Labor Department’s data.
Even though the report missed estimates, other data suggest labour market remains overheated as Federal Reserve Chair Jerome Powell described. The central bank is expected to hike interest rates by 50 basis points in a stepped-up effort to tame decades-high inflation.
Service-provider employment rose by 202,000, led by leisure and hospitality and professional and business services. Employment at goods producers was up 46,000, reflecting advances in manufacturing and construction.