US Sees Surge in Global Trade with Energy and Auto Exports

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US Sees Surge in Global Trade with Energy and Auto Exports

U.S. trade surges with energy and auto exports in March 2023, but jobless claims rise and labor market cools.

March 2023 U.S. Trade Surges: Key Insights & Impact on Job Market

The U.S. trade with the rest of the world increased in March 2023, as the country shipped more oil, natural gas, and vehicles overseas. Furthermore, exports to China rose after the country lifted COVID-19 restrictions. The Commerce Department report on U.S. import and export trends reveals important takeaways for investors and economists alike. In this article, we will analyze the report’s findings, as well as explore the reasons behind the increase in U.S. jobless claims that point to a cooling labor market.

Imports Decline, Consumer Spending Cools Off

According to the Commerce Department report, imports declined by 0.3% in March, amounting to a seasonally adjusted $320.4 billion. The decrease is attributed to lower shipments of semiconductors, chemicals, and cellphones, as well as higher imports of consumer goods such as clothing. Additionally, U.S. consumer spending on goods declined in February and March due to rising interest rates and a gradually cooling labor market.

Joshua Shapiro, an economist at Maria Fiorini Ramirez, noted that “import growth has definitely cooled off,” pointing to the slowdown in consumer spending in the U.S. The decrease in imports narrows the trade deficit, which fell to $64.2 billion in March from February’s deficit of $70.6 billion.

U.S. Imports and Exports

The U.S. imported $791 billion in goods in the first quarter of 2023, up just 0.5% from the final quarter of 2022 and well below quarterly levels for most of last year. Rubeela Farooqi, an economist at High Frequency Economics, noted that “trade flows will likely continue to see the effects of slower growth prospects domestically and abroad over coming months.”

In contrast, exports rose by 2.1% in March to $256.2 billion, as businesses shipped more autos, oil, and natural gas overseas. The U.S. also exported more to China and imported fewer goods from there in March, after the world’s second-largest economy relaxed strict COVID-19 controls. The trade deficit in goods with China in March was the lowest since March 2020.

Services Exports Rise as Americans Travel Overseas

The import and export trends narrowed the U.S. trade gap in goods and services by 9.1% in March. The deficit fell to $64.2 billion from February’s deficit of $70.6 billion. Imports of services increased in March, as Americans continued to travel overseas following the reopening of international borders. Additionally, services exports rose due to the increase in travel.

U.S. Jobless Claims Increase as Labor Market Cools

Separate data released on Thursday, however, indicates a cooling labor market. Initial claims for jobless benefits, a proxy for layoffs, increased by 13,000 to a seasonally adjusted 242,000 last week, the Labor Department reported. In January, the weekly level of claims was near 200,000.

The upward trend in claims this year is consistent with other labor market data showing an easing from ultra-hot levels. U.S. job openings dropped to their lowest level in nearly two years in March, and layoffs rose sharply. Economists estimate that Friday’s jobs report will show job growth slowed somewhat in April, and the unemployment rate increased slightly.

Read More: Impact of March Jobs Report on US Stock Market

U.S. Trade with World Increases

The U.S. trade with the rest of the world increased in March 2023, as companies shipped more autos, oil, and natural gas overseas. However, imports declined by 0.3% due to lower shipments of semiconductors, chemicals, and cellphones. The decrease in imports narrowed the trade deficit, which fell to $64.2 billion in March. Services exports rose due to an increase in travel, as Americans continued to travel overseas following the reopening of international borders.

Despite the increase in U.S. trade, the Labor Department reported an increase in jobless claims, which suggests a cooling labor market. Economists estimate that Friday’s jobs report will show job growth slowed somewhat in April, and the unemployment rate increased slightly. Rubeela Farooqi, an economist at High Frequency Economics, noted that “trade flows will likely continue to see the effects of slower growth prospects domestically and abroad over coming months.” Investors and economists will need to keep a close eye on these trends as they will have significant implications for the U.S. economy.

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Stephen Fruchs

Stephen Fruchs is a finance contributor on the Trade Oracle platform. His experience is extensive in everything from micro to macroeconomic trends. With a decade of experience in the finance space, Stephen Fruchs provides consistent economic insights into the changing stock market landscape.