[06/04/13]  Americans’ demand for foreign goods such as cars and cellphones pushed imports higher and widened the U.S. trade deficit in April, while slower overseas growth restrained U.S. exports.

Americans’ appetite for foreign goods, including cars and cellphones, pushed imports higher and widened the U.S. trade deficit in April, while slower growth abroad restrained overseas demand for U.S. products.

Imports rose 2.4% from March, to $227.7 billion, and exports increased just 1.2%, to $187.4 billion, the Commerce Department said Tuesday. As a result, the nation’s trade gap expanded by 8.5% from March to $40.3 billion.

The report bolstered evidence that U.S. consumers are powering the nation’s economic growth despite higher payroll taxes that took effect in January. The rise in April imports reflected higher consumer demand for foreign cars, clothing, drugs and other consumer goods, showing that Americans appear to be in a spending mood.

But the figures also signaled caution for key parts of the economy. While overall U.S. exports rose for the second time in three months, new signs of trouble emerged in recession-plagued Europe and slower-growing Asian economies.

“It certainly supports the idea that there isn’t a huge amount of demand really anywhere,” said Dan Greenhaus, chief global strategist at New York-based BTIG LLC. “The data is just broadly in line with a moderately growing economy.”

Tuesday’s data underscored the drop in U.S. demand for imported oil. Seasonally adjusted April imports of petroleum fell to the lowest level since November 2010, driven largely by increased domestic production and higher fuel efficiency of cars. Some forecasts show domestic production will exceed imports later this year, a development that should shrink the nation’s trade deficit.

Overall international trade remains weak after rising at a solid clip earlier in the recovery. Imports have fallen over the past year, reflecting in part a reluctance by businesses in the U.S. to invest in equipment and facilities. Meanwhile, exports are up only 0.8% this year compared with the same period last year.

Europe’s turmoil is fueling concerns that a weaker global economy will restrain U.S. growth this year as American factories cut production amid falling orders. Many economists expect the U.S. to grow at an annual pace between 1% and 2% in the April-through-June quarter. That would be slower than the 2.4% clip in the first quarter of 2013.

U.S. exports to the European Union so far in 2013 have fallen 7.4% compared with the same period last year. U.S. exports to the U.K alone have dropped 20% this year compared with the same period last year, a reflection of pain across the British economy.

The report contained at least one bright spot for U.S. exporters: Continued strength in auto sales in the U.S. is helping drive shipments of parts to Mexico.

Exports of vehicles and vehicle parts to Mexico have grown 9.5% so far in 2013, compared with a year earlier. The vast majority of what is being sent south is transmissions and other components, which are placed into assembled cars and shipped back to the U.S. The Mexican auto industry is expected to grow more than 10% this year, thanks in large part to a growing market in the U.S.

As a result, U.S. auto exports to that country have grown nearly the same amount so far this year compared with last year. “A lot of hot-selling cars are made in Mexico,” said Sean McAlinden, chief economist at the Center for Automotive Research.

Additionally, automotive exports to Canada, the largest market for U.S. cars and parts, have risen 1.2% so far this year.

This article was published by the Wall Street Journal on June 4, 2013.  It was written by Josh Mitchell and Eric Morathand and can be viewed here.