WASHINGTON (Reuters) - The U.S. trade deficit narrowed in April as global demand faltered, with both imports and exports dropping from record high levels set in March, a government report showed on Friday.
The gap shrank 4.9 percent to $50.1 billion, as imports of goods and services dropped 1.7 percent to $233.0 billion, the U.S. Commerce Department said.
Exports slipped 0.8 percent to $182.9 billion. Both imports and exports were still the second highest on record.
Wall Streets analysts surveyed before the report had expected a slightly smaller trade gap of $49.5 billion.
U.S. exports to the 27-nation European Union, which is teetering on the edge of recession stemming from a prolonged debt crisis that is hampering growth, fell 11.1 percent in April to $22.3 billion.
“With the euro zone crisis set to rumble on for some time yet, U.S. exports to the euro zone are only likely to fall further,” said Paul Dales, senior U.S. economist at Capital Economics in Toronto.
“The upshot is that net trade is unlikely to add much to GDP growth this year and may even subtract from it,” he said.
The EU collectively was the United States’ second largest export market last year, and exports in the first four months of 2012 were 3.5 percent above the same period in 2011 despite the downturn in April.
Markets largely shrugged off the report, which was close to expectations, as traders remained on the alert for further government action to address the crisis in Europe.
Graphic - U.S. trade gap narrows: link.reuters.com/ryr68s
U.S. exports to China, which also is growing more slowly than in recent years, fell 14 percent in April.
China has been one of the fastest growing markets for U.S. goods, and exports to that country were up 4.3 percent for the first four months of 2012.
On Thursday, the People’s Bank of China cut interest rates for the first time since the global financial crisis in mid-2008 in a bid to bolster growth.
The drop in exports in April mainly reflected less foreign demand for capital goods, such as aircraft, drilling equipment and machinery, and industrial supplies and materials, which range from cotton to chemicals.
U.S. imports fell despite an increase in the average price of imported oil to $109.94 per barrel, the highest since August 2008. The volume of oil imports also rose slightly to 9 million barrels per day.
Oil prices have fallen sharply in recent weeks, suggesting the nation’s energy import bill could drop.
U.S. imports from the EU slipped 11.1 percent to $31.0 billion, while imports from China rose 4.8 percent to $33 billion. By category, capital goods and industrial supplies and materials led the import decline.
The United States imported a record $5.5 billion worth of goods and services from South Korea in April. A free trade pact between the two countries went into force on April 15.
Editing by Andrea Ricci