US trade deficit narrows in April

The weak dollar has helped US exports

The US trade deficit fell unexpectedly in April, helped by the weak dollar.

With the low value of the greenback making US exports more competitive and appearing to depress import demand, the deficit fell 6.2% to $58.5bn (£30bn).

This compares with a revised $62.4bn in March, and average market expectations of an increase to $63.5bn in April.

US exports rose by 0.2% to a record $129.5bn, said the Commerce Department, led by aircraft sales, while imports fell by 1.9% to $188bn.

Chinese concern

Despite the narrowing of the overall deficit, America's trade gap with China jumped 12.3% to $19.4bn, its highest level since January.

Analysts say this will undoubtedly cause displeasure on Capitol Hill, since many US congressmen argue that China is using unfair practices to boost its exports.

Many in the US maintain that since the Chinese government does not allow the yuan to trade freely, the country's exports are artificially cheap.

Analyst Lan Lancz of Lancz & Associates said that while the narrowing of the overall deficit was "a positive sign", the key issues remained the possibility of higher US interest rates and energy prices.

The Federal Reserve next meets to consider US interest rates on 27-28 June.

While most analysts expect rates to remain at 5.25% this time - where they have been for the past year - there is now some concern that the Fed may raise rates further towards the end of the year to control inflation.