April trade deficit edges up to $29.2 billion

WASHINGTON — The U.S. trade deficit edged up in April as crude oil prices hit the highest level since December. But the imbalance so far in 2009 remained well below last year's pace and economists expect that to continue as the global recession dampens demand for automobiles, heavy machinery and other goods.

The Commerce Department said Wednesday that the deficit rose for a second straight month in April, climbing 2.2 percent to $29.2 billion. That was slightly higher than economists' expectations.

The overall deficit is running at an annual rate of $361.1 billion, about half of the $695.9 billion total for all of 2008. The drop in imports has been greater than the fall in exports, which also are down significantly as the global recession cuts demand for U.S. products in key markets.

Because of that weakness, economists do not believe that exports, which had been one of the few bright stops for the U.S. economy, will be able to lead the recovery.

"When growth slows, that means demand for everything comes down and that is true not just in the U.S. but everywhere else," said Joel Naroff, chief economist at Naroff Economic Advisors.

For April, exports of goods and services fell $2 billion, or 2.3 percent, to $121.1 billion, the smallest monthly total since July 2006. The drop included big declines in sales of industrial engines, machinery, and motor vehicles and parts. Sales of commercial aircraft rose.

Imports dipped $2.2 billion, or 1.4 percent, to $150.3 billion, the lowest total since September 2004. Shipments of foreign-made cars, oil drilling equipment, computers and machine tools all fell.

But imports of petroleum bucked the downward trend, rising 2.1 percent to $18 billion. The average price for a barrel of imported crude oil jumped to $46.60 in April, from $41.36 in March. It was the highest level since December and is expected to rise in coming months given recent increases in crude oil prices.

Oil prices rose above $71 per barrel on Wednesday to reach a high for this year as investors purchased crude as a hedge against the inflation risks posed by a weakening U.S. dollar. Even with the recent increases, oil prices remain far below last year's levels when they jumped to record-highs approaching $150 per barrel.

Paul Dales, U.S. economist at Capital Economics in Toronto, said that even if oil prices keep rising and push the trade deficit toward $40 billion, that would "reverse only a third of the narrowing ... over the past 12 months."