Trade Deficit Narrows in May
The U.S. trade deficit narrowed to $46 billion in May, an improvement brought about as American exports posted their best month on record.
The latest snapshot of trade activity, reported Tuesday by the Commerce Department, came after the deficit had mushroomed to an all-time monthly high of $48.1 billion in April. The 4.5% reduction in the deficit represented the largest decrease since October 2002. The decline was the first after five straight months of increases.
“It’s nice to have some good news,” said Clifford Waldman, economist at Manufacturers Alliance/MAPI, a research group. “Export activity is getting more buoyant.”
The trade deficit figure for May was better than some analysts had expected. They were forecasting the deficit to hold fairly steady. The narrowing of the gap resulted from export growth far outpacing imports, which still climbed to a record high.
Exports of U.S. goods and services increased to a record $97.1 billion in May, representing a 2.9% increase from April’s level. Exports were helped by a weaker dollar, which makes U.S. goods cheaper for foreign buyers, and a pickup in overseas economies.
Imports, meanwhile, rose by 0.4% to $143.1 billion in May, reflecting Americans’ voracious appetite for foreign-made goods.
U.S. exporters saw demand for a variety of their products increase. Sales of American-made automobiles, engines and parts in May rose by 1.3% to $7.2 billion, a record high. Industrial supplies, including chemicals and plastic materials, also hit an all-time monthly high of $17.3 billion, up from $16.3 billion in April.
Exports of capital goods, such as airplanes and industrial engines, rose to $28.8 billion, the highest level since March 2001.
On the import side, sales of foreign-made autos and parts hit a record high of $19.4 billion in May, up from about $19 billion in April. Imports of foods, feeds and beverages were valued at $5.2 billion, also a record.
By country, the U.S.’s politically sensitive trade deficit with China widened to $12.1 billion in May as imports from China climbed to $15 billion.
The Bush administration has been pressing Beijing to stop linking its currency to the dollar and to let the value of the yuan be set in open markets.
The U.S. trade deficit with Japan narrowed to $5.5 billion, compared with $6.4 billion in April. The deficit with Canada narrowed to $4.8 billion from $5.6 billion.
The U.S. deficit with oil-producing countries, including Saudi Arabia and Venezuela, widened to a record high of $5.6 billion in May.
