U.S. Trade Deficit Surged Sharply in May to $10.2 Billion
The U.S. trade deficit widened dramatically in May to $10.24 billion, the biggest imbalance in five months, as America’s appetite for foreign goods rebounded sharply, the government said today.
The Commerce Department said the May deficit figure represented a 23.6% increase from a revised imbalance of $8.29 billion in April, when the nation registered the lowest monthly trade gap in more than four years.
Analysts had been expecting the deficit to widen in May, but only to about $9 billion.
The deterioration in May reflected a sharp 4.3% increase in imports to a new high of $40.71 billion and a 0.9% drop in sales of U.S. goods abroad.
May’s trade gap was the biggest since a $10.8-billion deficit recorded last December.
Encouraged by Exports
Commerce Secretary Robert A. Mosbacher said the May figure was disappointing, but he added that “we are encouraged by the continuing strength of exports.”
“Exports, while off slightly in May, continued at near record levels of over $30 billion for the third month in a row,” Mosbacher said. “This is an encouraging trend, and reflects continued success by American companies in expanding foreign markets.”
Economist Michael Evans, head of a Washington consulting firm, said the increase in May was partly a comeback from an artificially low number in April, but he said the monthly trade deficits are likely to rise gradually for the rest of the year.
“I wouldn’t say this was a fluke or that it’s going to get better again,” Evans said. “I think it’s a harbinger of things to come.”
Even with the spurt in May, the trade gap for the first five months of the year was running at an annual rate of $111.1 billion, below the 1988 deficit of $118.53 billion.
Last year’s figure represented a dramatic 22.1% improvement over 1987, when the trade deficit hit an all-time high of $152.12 billion, and accounted for almost half of all U.S. economic growth in 1988.
Stronger Dollar
Analysts have been predicting that the slowing of the U.S. economy could help hold down this year’s deficit by curbing domestic demand for imports. But they also warn that the recent strength of the dollar against foreign currencies could stunt further progress on the trade gap.
In May, imports reached a new high as increases were recorded in virtually every major category except autos. Imports of agricultural products jumped 10.7%.
Petroleum imports shot up 17.3% to $4.75 billion as the price of a barrel of oil rose to $18.40, from $17.83 in April. The volume of oil imports also rose in May, reaching 8.33 million barrels a day, from 7.57 million a day in April.
U.S. exports, meanwhile, fell to a seasonally adjusted $30.47 billion in May as sales declined in most major categories. Exports of consumer goods dropped 5.7%.
As usual, the United States posted its largest trade deficit in May with Japan, a $4.28-billion shortfall that was up from $3.89 billion in April.
