The U.S. trade deficit surged to its highest level in nearly 6-1/2 years in March as imports rebounded strongly after being held down by a labor dispute at key West Coast ports, suggesting the economy contracted in the first quarter.
The Commerce Department said on Tuesday the deficit on the trade balance jumped 43.1 percent to $51.4 billion, the largest since October 2008. The percent rise also was the biggest since December 1996.
February's shortfall was revised to $35.9 billion from a previously reported $35.4 billion. Economists polled by Reuters had forecast the trade deficit rising to $41.2 billion.
When adjusted for inflation, the deficit widened to $67.2 billion in March, the largest in eight years, from $51.2 billion the prior month.
Prices for U.S. Treasuries turned positive after the data, while U.S. stock index futures added to losses. The dollar was slightly weaker against a basket of currencies.
March's trade gap was far larger than the $45.2 billion deficit the government assumed in its snapshot of first-quarter gross domestic product last week.
In that report, the government estimated trade sliced off 1.25 percentage points from GDP, helping to pull down growth to a 0.2 percent annual pace. The economy expanded at a 2.2 percent rate in the fourth quarter.
With March's trade deficit coming in bigger than assumed, growth is likely to be revised down to show a contraction when the government publishes its second GDP estimate later this month.
The U.S. trade deficit with Japan was the largest in two years.
The now-settled labor dispute at the West Coast ports significantly slowed imports and exports at the start of the year. The dollar, which has gained about 12 percent against the currencies of the United States' main trading partners since last June, has also weighed on trade.
In March, imports jumped 7.7 percent, the largest increase on record, to $239.2 billion. Imports are a drag on growth.
Some of the imported goods in March likely ended up as inventories, which in the first quarter recorded their biggest increase since the third quarter of 2010.
Imports of food and capital and consumer goods were the highest on record, while imports of industrial supplies and materials were the lowest on record.
Imports of petroleum products hit a record low, highlighting lower crude oil prices and increased energy production in the United States, which has reduced its dependence on foreign oil. The average import price for crude oil was $46.47 a barrel in March, the lowest in six years.
Exports increased 0.9 percent to $187.8 billion in March. Petroleum exports were the lowest since February 2011. Exports to the European Union rose 8.6 percent, with those to Germany reaching their highest level since October 2008.
The United States sold the fewest amount of goods and services to Brazil since April 2010. Exports to Canada and Mexico—the main U.S. trading partners—were up in March.
Exports to China increased 13.6 percent, while imports from that country jumped 31.6 percent. That left the politically sensitive U.S.-China trade deficit at $31.2 billion, up 38.6 percent from February.