By Lucia Mutikani

WASHINGTON, (Reuters) – The U.S. trade deficit fell by its largest in 10 years in April. Exports soared to a new record in April. This suggests that trade may be able to contribute to economic growth in this quarter.

Commerce Department on Tuesday reported that the trade deficit had fallen 19.1% to $87.1 billion, its largest drop since December 2012. The 3.5% increase in exports of services and goods to $252.6 billion was an unprecedented level.

Michael Pearce of Capital Economics, New York said that the big decline in the trade deficit for April suggested net trade would be an important boost to second-quarter GDP Growth.

The record-breaking trade deficit cut 3.23 percentage points off gross domestic product during the first quarter. GDP fell at 1.5% annually after rising at 6.9% in fourth quarter. For seven consecutive quarters, trade has been subtracting from GDP.

The second quarter growth estimates are at 4.8% annually.

The large increase in international exports was mainly due to shipments of industrial materials and supplies. This record-breaking figure came amid rising exports of precious metals, petroleum products, and shipments of industrial supplies. The highest record-breaking petroleum exports stood at $27.2 million. Exports of food were also highest ever, at $27.2 billion. The country sold $2.1 million more soybeans.

Exports of capital goods rose to $47.5 billion from $1.2billion in March 2019, the highest increase since March 2019. Shipments of civilian aircraft increased by $1.3billion.

Services exports increased by $2.4 billion and $76.5 billion due to gains in transport and travel.

The April imports of goods, services and other items fell by 3.4% at $339.7 Billion. Businesses replenished inventory to satisfy strong domestic demand. Imports were rising quickly.

However, the Federal Reserve has raised interest rates in an effort to reduce inflation. This is slowing down demand. Some goods have inventories that are close to their normal levels, which reduces the need for imports. China’s ongoing COVID-19 battles may also have contributed to the drop in imports.

The decline in consumer goods was $6.3 Billion, with a decrease in apparel, household, and toys, games, and sporting goods. The number of pharmaceutical preparations fell as well. Imports for industrial supplies and material fell $5.3 Billion, while finished metal shapes plunged $5.6 Billion.

Imports of capital goods fell by $2.6 billion while computers dropped $1.9 billion. However, imports of parts and motor vehicles rose $1.4 billion, to a record $33.7 billion. The highest ever recorded import of food was also attained.

Imports of petroleum products in April 2014 were their highest levels since October 2014. In April 2014, petroleum imports averaged $94.99 per barrel. It was the highest monthly total since August 2014.

After Russia’s unprovoked invasion of Ukraine, oil prices are on the rise. Other commodities such as wheat, sunflowers, and other crops have also seen a spike in their prices.