Trade Deficit Widens Less Than Expected
The U.S. trade gap widened less than expected in May, but the monthly petroleum bill hit a record high as the imported oil price posted the biggest gain in nearly 16 years, government data showed Wednesday.
The U.S. trade deficit grew to $63.8 billion in May from $63.3 billion in April, below the $64.9 billion shortfall Wall Street analysts had expected. Surging oil prices, however, kept the gap near record levels, even as the non-petroleum deficit dipped to its smallest level since August.
Petroleum imports hit a record $27.9 billion as the average price of imported crude oil hit a record $61.74 a barrel in May, rising $4.92 from April for the biggest month-to-month gain since Iraq invaded Kuwait in August 1990.
May imports from members of the Organization of the Petroleum Exporting Countries hit a record $13.6 billion, pushing the United States’ petroleum trade deficit that month to a record $25.4 billion.
International tensions over Iran’s nuclear program, China’s continued appetite for oil and bigger gasoline demand in the United States with the onset of the summer driving season helped boost oil prices in May.
At the same time, U.S. exports of goods and services leapt 2.4% to a record $118.7 billion, helping to shrink the non-oil portion of the trade deficit, even as overall imports rose to a record $182.5 billion.
“The consensus has been consistently bearish on this trade number and that it would be continuously widening,” said Richard Franulovich, senior currency strategist at Westpac Banking Corp. “But the fact is in the last two to three months, U.S. trade numbers are stabilizing.”
The trade deficit is running at an annual rate of $763 billion, 6.5% higher than last year’s record of $716.7 billion. President Bush’s critics blame the deficits on unfair trade practices in China and elsewhere, and say they have contributed to the loss of nearly 3 million manufacturing jobs since Bush took office.
Critics were vocal on Capitol Hill on Wednesday as Bush headed to Germany in advance of a Russian-hosted summit this weekend of the Group of 8 industrialized nations. Energy shortages and prices are expected to be among the main issues in discussions.
“Month after month, we get new evidence documenting the magnitude of the failure of current U.S. trade policies,” Sen. Byron L. Dorgan (D-N.D.) said. “Yet the Bush administration and its allies in Congress just keep doing more of the same.”
The May export surge was driven by an increase in capital goods, especially of civilian aircraft. Exports in other major categories such as consumer goods, industrial supplies and materials and foods, feeds and beverages rose to record levels that month.
The trade deficit with China widened in May to $17.7 billion. The U.S. ran a record $5.5-billion trade deficit with Mexico, and imports from South and Central America set a record.
