Trade Deficit Falls in March

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May 12, 2005--The U.S. trade deficit fell to the lowest level in six months in March, thanks in part to a surge in U.S. exports of capital and consumer goods.

Revised Commerce Department statistics show that the deficit dropped 9.2% in March to $55 billion, the lowest it has been since last September. The improvement reflects a 1.5% increase in exports of U.S. goods and services. Exports rose to an all-time high of $102.2 billion in March, up from $100.7 billion in February. The largest gains were seen in industrial supplies and materials, commercial aircraft, consumer goods and farm products.

According to Brian Headd, economist at the Small Business Administration, it is not only large manufacturers that benefit from this increase in exports. "Large manufacturers will often outsource areas of their production to small-to-midsize companies in order to increase productivity. Small businesses play a large part in exporting, sometimes without even knowing it," he said.

Headd also pointed out that small businesses may be underrepresented in the export statistics because of the difficulty in quantifying the value of services. "While it is easy to measure goods, it is difficult in measuring the export of services which many small businesses provide," he said.

Imports fell 2.7% in March to $157.19 billion, down from a record high in February. The drop was seen in a number of industries, but most noticeably in the import of foreign cars and consumer goods.

The U.S. trade deficit with China fell by $1 billion in March to $12.9 billion, while the deficit with Japan increased $0.9 billion to $7.8 billion. The nation's trade deficit with Canada dropped from $5.8 billion in February to $5 billion in March.

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Kasey Wehrum

Staff writer Kasey Wehrum has written for Inc. magazine on subjects ranging from the businesses behind professional bull riding to gadget inventor and father of the infomercial, Ron Popeil. His work has appeared in the New York Times, Worth, Budget Travel, and on MSNBC.com. He lives in New York City.

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