US trade deficit expands to $40.4 billion in March

The US trade deficit rose to its highest level in March since 2008, as both imports and exports rose by more than 3 per cent signalling improved US and foreign demand, the commerce department said on Wednesday.

The trade deficit rose 2.5 per cent to $40.4 billion, the highest since December 2008-when world trade drastically fell after the financial crisis in September 2008.

Imports of petroleum rose sharply to $22.3 billion in March, the highest since October 2008.

Imports increased 3.1 per cent to $188.3 billion, while exports rose 3.2 per cent to $147.9 billion the highest level since October 2008.

The deficit this year is 23.4 per cent higher at $467.2 billion,than the previous year's $378.6 billion.

The US economy is on a roll as demand for products manufactured domestically have increased indicating an improving economy which is reflected in the higher deficit. But with the euro zone crisis the demand can slow down, as Europe is one of the major markets for American goods.

The pulse of the economy is the consumer spending rate which rose in the first three months of the year. Business spending on new equipment and software indicate growth in imports, however, exports grew on sale of capital goods and farm product to emerging markets in Asia.