U.S. trade gap widens in April

The U.S. trade deficit widened in April, suggesting trade could be a drag on growth in the second quarter even as demand holds up.

The Commerce Department said Tuesday the trade gap increased to $40.3 billion from $37.1 billion in March. That was less than economists' expectations for a rise to $41 billion.

While the trade deficit was not as large as some economists had anticipated, it still suggested that trade would not be of much help to economic growth this quarter.

"If you think the U.S. economy is going to outperform the rest of the world, then our import demand will grow at a faster pace than export activity," said Millan Mulraine, a senior economist at TD Securities in New York.

The more heavily U.S. business and consumers turn to foreign products, the bigger the bite out of domestic production.

The data prompted some economists to trim their second-quarter GDP estimates. Macroeconomic Advisers pared its estimate by two-tenths of a percentage point to a 1.2 percent annual rate, while Morgan Stanley economists cut theirs to 1.4 percent from 1.6 percent.

U.S. financial markets were little moved by the data, with investors awaiting a report on May employment on Friday for fresh clues on when the Federal Reserve might start scaling back its expansive monetary stimulus.

Despite a widening in the trade deficit in April, details of the report offered some good news for an economy that hit a speed bump as higher taxes and cutbacks in anticipated government spending took hold this year.

In April, imports of goods and services increased 2.4 percent to $227.7 billion.

The snapback in imports, driven mostly by capital goods and automobiles, pointed to resilience in domestic demand.

While imports rose, the petroleum bill was the lowest since November 2010.