US trade figures released yesterday suggested the US economy bounced back after a soft patch in March, but did not provide clear evidence that the trade deficit was stabilising.

The trade deficit rose to $57 billion (€47 billion) in April, below Wall Street's consensus forecast of $58 billion. March's deficit was revised down $1.4 billion to $55 billion. Imports and exports hit new records in April, indicating stronger economic activity than in the previous month.

The downward revision to the March data suggested that first-quarter growth in gross domestic product would be revised up further, according to economists.

The dollar strengthened against the main currencies while bond prices fell after the report.

Alan Greenspan, Federal Reserve chairman, gave upbeat testimony on the economy this week and provided no indication that the central bank was about to cease its rate tightening.

Imports rose by more than 4.1 per cent in April, after the depressed March reading, with about half the increase accounted for by the higher price of oil.

Exports to China rose, but the much larger rise in imports meant the bilateral trade deficit rose by 14 per cent to $14.7 billion. In the four months to April, textile imports from China were twice as large as the same period of last year.

Exports rose by 3 per cent, although more than a third of the increase was accounted for by the volatile civil aircraft component, meaning that pace of growth was unlikely to be sustained.

Nariman Behravesh, chief economist at the consultancy Global Insight, said the trade figures provided further support for the Fed's sanguine view of economic prospects. "Oil played a role in boosting imports but domestic demand growth was quite strong in April. The economy is still probably expanding at about a 3.5 per cent rate," he said.

April's deficit was less than the average of the first three months of the year which, if sustained, would mean the international economy would add to the US growth rate in the second quarter.

In the first four months of 2005, the trade deficit was almost $229 billion, compared with $187 billion in the same period of last year.

Economists said that, while the US economy continued to grow faster than Europe and Japan, and Asian governments prevented their currencies from rising against the dollar, the trade deficit was unlikely to shrink significantly. - (Financial Times Service)