May’s Trade Deficit Up to $7.73 Billion : Increase Reflects Big Jump in Auto and Oil Imports

The U.S. trade deficit climbed to $7.73 billion in May, reflecting a big jump in imports of oil and cars, the government said today.

The Commerce Department said the May trade deficit was 5.8% higher than a revised April imbalance of $7.31 billion.

In May, imports climbed 2.9% to $40.52 billion, offsetting a 2.3% rise in U.S. exports, which totaled $32.79 billion in May. The trade deficit is the difference between imports and exports.

The big surge in oil accounted for almost half of the increase in imports in May, with imports of cars and other manufactured goods accounting for the rest of the gain.

This increase overshadowed a healthy advance in U.S. exports, which posted their second-best showing on record.

The Bush Administration is counting on strength in exports to offset a sluggish domestic economy and keep the country out of a recession this year.

During the first three months of 1990, fully half of all economic growth was contributed by gains in exports.

Through the first five months of this year, the U.S. trade deficit has been running at an annual rate of $97.68 billion, surprising many analysts who had been forecasting that this year’s deficit would be little changed from the $109.4-billion imbalance recorded in 1989.

The Bush Administration is confidently predicting that America’s trade performance will continue to improve throughout the year. However, many private analysts worry that America’s growing dependence on foreign oil will cut into the export gains being made by U.S. businesses.

In May, oil imports shot up 15.2% to $4.32 billion. The advance reflected an increase in the volume of shipments, which rose to 8.95 million barrels a day, up from daily shipments of 7.55 million barrels in April.

The price per barrel actually fell to $15.57 per barrel, down a full $1 from the April price.

Shipments of new cars were up 5.2% in May to $3.88 billion, reflecting higher imports from Canada and other countries, which offset a drop in car shipments from Japan.

The rise in U.S. exports reflected higher shipments in a variety of areas, including automotive parts, capital goods and consumer products.

The United States continued to enjoy a trade surplus with the countries of Western Europe of $812 million in May while Japan continued to be the country with which the United States had the largest trade deficit.

In May, the deficit with Japan totaled $2.97 billion, down sharply from a $3.95-billion April imbalance.