Trade Deficit Takes a Turn for the Worse

The U.S. trade deficit widened to $14.4 billion in May, reversing two consecutive months of improvement, the government said today. Contributing to the worsening of the trade balance was a record $34.8 billion in imports--up from $33.5 billion in April.

The Commerce Department said the May trade imbalance increased from deficits of $13.3 billion in April and $13.6 billion in March.

The report came as a disappointment to economists who had expected continued improvement in the trade balance under the pressure of a weaker U.S. dollar.

Last year, the United States ran a record trade deficit of $166.3 billion. For the first five months of 1987, the gap between imports and exports was running at an annual rate of $164.8 billion, suggesting only a slight improvement over last year.

Japan accounted for more than a third of the total deficit at $5.1 billion. It was the second-highest trade surplus Japan has had with the United States.

Western Europe followed with a $2.6-billion surplus, with West Germany providing $1.5 billion of that total. Then came Taiwan at $1.6 billion; Canada, $1.3 billion; OPEC nations, $1 billion; South Korea, $900 million; Mexico, $600 million, and Hong Kong, $500 million.

The value of imports rose 4% partly because the United States imported 600,000 more barrels of oil per day in May than it did in April and paid an average 43 cents more per barrel. As a result, petroleum imports rose $500 million to total $3.5 billion.

But the United States also brought in $800 million more in manufactured goods, pushing that total to $26.9 billion. Japanese autos accounted for about $300 million of that, autos from other countries another $160 million and clothing $115 million.

The old record for imports was $34.7 billion, set in March.

More shipments of manufactured goods accounted for May’s $300-million increase in exports. The government said the rise was spread across a variety of merchandise, including office machines, auto and tractor parts, electrical machinery, chemicals and new cars.

Although the dollar has stabilized somewhat on foreign exchange markets in the last month, it has fallen roughly 50% against the Japanese yen as well as against some key European currencies over the last two years.