Trade gap widens for first time since July

The U.S. trade deficit rose in March for the first time since July, but the global recession cut sharply into sales of American exports. The politically sensitive deficit with China increased.

The Commerce Department said Tuesday that the deficit widened to $27.6 billion in March, slightly lower than the $29 billion gap that economists had forecast.

The March deficit was 5.5% higher than February's revised $26.1 billion trade gap, which had been the smallest since November 1999.

In a sign U.S. demand remained weak in the first quarter, U.S. imports of goods and services fell 1% in March to $151.2 billion, the lowest since September 2004.

Imports of goods were the lowest since April 2004, and sub-categories such as non-petroleum products, industrial supplies and materials and capital goods were the lowest since February, May and July of 2004, respectively.

Low oil prices also continued to hold the value of imports in check, even though average prices jumped more than $2 a barrel in March to $41.36 a barrel.

The monthly average was still less than half of the March 2008 level of $89.85 a barrel, holding the petroleum import bill to a little more than $16 billion compared to $33.1 billion in the same month last year.

U.S. exports tumbled in March to $123.6 billion, after rising for one month in February. The March downturn resumed a trend dating back to July.

Overall goods exports were the lowest since February 2006 while exports of capital goods were the lowest since October 2005.

U.S. exports to China grew 19.1% in March to $5.6 billion, the highest in five months. However, U.S. imports from China also increased and the politically sensitive trade gap with that country grew to $15.6 billion in March.