A big and broad jump in imports which is a positive indication on domestic demand greatly widened the US goods deficit. April's swollen $99.4 billion result was far outside Econoday's consensus range and compared with May's revised $92.3 billion.

Imports of vehicles surged a monthly 10.4 percent for annual growth of 12.0 percent in what speaks to strong sales expectations among car dealers. Capital goods imports jumped 3.5 percent for annual growth of 10.1 percent which points to strong business confidence and investment in new equipment. Imports of industrial supplies rose 2.1 percent in the month with"other" goods also contributing, up 5.6 percent.

Further good news comes from exports where a healthy 0.5 percent monthly gain was dwarfed, however, by the import surge. Exports of consumer goods, usually a noticeable weakness for the US, rose 5.4 percent on the month for solid annual growth of 5.1 percent. Exports of vehicles, another US weakness, rose a monthly 3.6 percent with exports of capital goods, a great strength of the US, up 3.5 percent for annual growth of 7.4 percent.

Yet however positive these details sound, when calculating the net export component of GDP, April's giant deficit gets the second quarter off to a poor start. Not good news when today's second estimate of first-quarter GDP got a downgrade to a modest 1.3 percent annualized growth rate. But strength in domestic spending, both from consumers and businesses as underscored in April's goods data, could in the end more than offset trouble for net exports.

The US goods deficit (Census basis) is expected to widen further to $92.5 billion in April after deepening in March to a revised $91.5 billion from $90.3 billion in February.

This monthly report offers advance import and export data on the goods components of the monthly trade report. Goods make up roughly two-thirds of the nation's exports and roughly three-quarters of imports.

Note that data in the advance goods report are accounted for on a census basis and can differ slightly from subsequent data in the international trade report where goods data are accounted for on a balance of payment basis to adjust for changes in cross-border ownership.

Changes in the levels of imports and exports, along with the difference between the two (the trade balance), are valuable gauges of economic trends here and abroad. While these trade figures can directly impact all financial markets, they primarily affect the value of the dollar in the foreign exchange market.

Imports indicate demand for foreign goods here in the United States. Exports show foreign demand for U.S. goods. The dollar can be particularly sensitive to changes in the chronic trade deficit run by the United States, since this trade imbalance creates greater demand for foreign currencies.

Market reaction to this report is complex. Typically, the smaller the trade deficit, the more bullish it is for the dollar. Also, stronger exports are bullish for corporate earnings and the stock market. Like most economic indicators, the trade balance is subject to substantial monthly variability, especially when oil prices change.

It is also useful to examine the trend growth rates for exports and imports separately because they can deviate significantly. Trends in export activity reflect both the competitive position of American industry and the strength of domestic and foreign economic activity. U.S. exports will grow when: 1) U.S. product prices are lower than foreign product prices; 2) the value of the dollar is relatively weaker than that of foreign currencies; 3) foreign economies are growing rapidly.

Imports will increase when: 1) foreign product prices are lower than prices of domestically-produced goods; 2) the value of the dollar is stronger than that of other currencies; 3) domestic demand for goods and services is robust.