MNI DATA ANALYSIS: US April Trade Gap Narrowed To $46.2b>

--Census Goods Gap $67.3b Vs $68.2b Advance Estimate

--4Q Productivity Rev Down To +0.4%, Unit Labor Costs Rev Up To +2.9%

By Kevin Kastner and Holly Stokes

     WASHINGTON (MNI) - The U.S. international trade gap narrowed to 

$46.2 billion in April from $47.2 billion, a much smaller gap than the 

$48.8 billion deficit expected, reflecting a rise in exports and a 

decline in imports, data released by the Commerce Department Wednesday 

morning showed. 

     Annual revisions were included in the trade data, which the 

Commerce Department said resulted in very modest revisions of less than 

1% to most annual trade gaps, except for a 3% downward revision to the 

trade gap in 2017. That gap now stands at $552.3 billion. 

     After those annual revisions, the April trade gap was smaller than 

the first quarter average. This is also true for the census trade gap 

and the chained trade gap, so if May and June do not show significant 

gains, net exports could be a smaller drag on second quarter growth. 

     In other data released Thursday, first quarter nonfarm productivity 

was revised down to a 0.4% gain, while unit labor cost growth was 

revised up to a 2.9% pace, the strongest in a year. 

--CENSUS GAP NARROWER THAN ADVANCE

     The revised Census goods gap reported Wednesday was narrower than 

the advance estimate of $68.2 billion, coming in at $67.3 billion after 

$68.5 billion in the first quarter. 

     The overall BOP goods gap narrowed to $68.3 billion from $69.3 

billion in March, while the services surplus was roughly unchanged at 

$22.1 billion. 

     The chained goods gap narrowed to $77.5 billion from $78.2 billion 

in March, and is well below the $82.5 billion average for the first 

quarter. 

     The petroleum gap widened to $4.9 billion in April from $4.8 

billion in March, with import growth outpacing export growth. The 

nonpetroleum gap narrowed to $62.5 billion from $63.8 billion. 

--EXPORTS UP, IMPORTS DOWN

     Exports rose marginally in April, with a solid $1.3 billion rise in 

industrial supply exports and smaller gains in foods, feeds, and 

beverages, and consumer goods the key positive factors. However, there 

was a large $1.4 billion drop in capital goods exports, led by a $2.8 

billion decline in civilian aircraft exports, that provided significant 

offset. 

     Imports declined in the month due to a $2.8 billion drop in 

consumer goods, mostly a $2.2 billion decline in cell phone imports. 

There was also a $0.9 billion decline in auto imports. These were 

partially offset by a $1.2 billion rise in industrial imports, 

particularly a $1.0b billion gain in crude oil imports. 

     The unadjusted bilateral trade gap with China widened to $28.0 

billion in April from $25.9 billion in March and $27.7 billion a year 

ago. The Trump administration has threatened the use of tariffs to 

combat what it sees as unfair trading practices with China. 

     The gap with Mexico narrowed due to a record number of exports to 

that country, while the gap with Canada widened. The gap with Japan 

narrowed, but there was a wider gap with the EU. 

--UNIT LABOR COSTS STRONGER

     In addition to the revisions to the first quarter data, fourth 

quarter productivity stayed at 0.3%, but unit labor cost growth was 

revised up to a 2.5% rate for the quarter from a 2.1% increase 

previously reported, so the report overall suggests softer productivity 

and stronger labor cost growth over the most recent months than 

previously suggested. 

     Productivity now stands 1.3% higher that a year earlier, slightly 

faster than the 1.2% rate in the fourth quarter. Unit labor costs were 

up 1.3% year/year in the first quarter after a 1.8% year/year gain in 

the fourth quarter, but were still up from the year/year rates seen in 

early 2017. 

     ** MNI Washington Bureau: 202-371-2121 ** 

[TOPICS: MAUDS$,M$U$$$]