THE U.S. trade deficit increased by the most in more than a year in March as a record drop in exports offset a shrinking import bill, suggesting the novel coronavirus outbreak was upending the global flow of goods and services.

Other data Tuesday showed the tough measures to slow the spread of COVID-19, the respiratory illness caused by the coronavirus, pushed the nation’s vast services sector into contraction in April for the first time in nearly 10-1/2-years.

The reports were the latest indication that the U.S. economy was sinking deeper into recession and that a sharp rebound was unlikely even as parts of the United States started to reopen.

“Trade between locked-down countries all over the globe will continue to falter in what looks like a second Great Depression and it could be years before the globalization trend reasserts itself as the world grows more cautious during this unprecedented health crisis,” said Chris Rupkey, chief economist at MUFG in New York.

The U.S. Commerce Department said the trade deficit jumped 11.6 percent, the largest rise since December 2018, to US$44.4 billion. Economists polled had forecast the trade gap increasing to US$44 billion in March.

Global lockdowns have severely disrupted supply chains and also weighed on demand for goods and services, shrinking economic output.

In the United States, gross domestic product declined at a 4.8 percent annualized rate in the first quarter, the steepest pace of contraction in output since the fourth quarter of 2008. Economists believe the economy entered recession in the second half of March when the social distancing measures took effect.

The National Bureau of Economic Research, the private research institute regarded as the arbiter of U.S. recessions, does not define a recession as two consecutive quarters of decline in real GDP, as is the rule of thumb in many countries. Instead, it looks for a drop in activity, spread across the economy and lasting more than a few months.

Though some parts of the country have started reopening, economists did not see the economy quickly returning to pre-pandemic levels, which they said would take years. Reopening the economy also involves the risk of a second wave of infections and further lockdowns.

A survey Tuesday from the Institute for Supply Management (ISM) showed its non-manufacturing activity index fell to a reading of 41.8 last month, the first contraction since December 2009. It was also the lowest level since March 2009 and followed a reading of 52.5 in March.

A reading below 50 indicates contraction in the services sector, which accounts for more than two-thirds of U.S. economic activity. The ISM survey’s measure of new orders for the services industry dropped to a record low in April.

In March, the politically sensitive goods trade deficit with China decreased US$4.2 billion to US$11.8 billion, a 16-year low. Imports from China fell, while exports to that country rose.

When adjusted for inflation, the overall goods trade deficit increased US$6.5 billion to US$75.3 billion in March. Despite’s March’s increase, the so-called real goods trade deficit narrowed sharply in the first quarter.

In March, exports dropped a record 9.6 percent to US$187.7 billion, the lowest since November 2016. Goods exports tumbled 6.7 percent, the most since December 2008, to US$128.1 billion. There were decreases in exports of capital goods, which fell US$2 billion to US$42.6 billion, the lowest since November 2016.

Exports of motor vehicles and parts dropped US$2.5 billion to US$11.3 billion in March, the weakest since November 2011. Shipments of consumer goods hit a seven-year low in March. Exports of services tumbled US$10.8 billion to US$59.6 billion, the lowest level since November 2013, hurt by travel restrictions because of COVID-19.

Imports dropped 6.2 percent to US$232.2 billion, the lowest since November 2016. The percentage decline in imports was the biggest since January 2009. Goods imports fell 2.3 percent to US$193.7 billion in March, the lowest since August 2017. (SD-Agencies)