Trade deficit narrows in May
The U.S. trade deficit narrowed in May as exports -- including industrial supplies and consumer goods -- climbed to an all-time high.
The latest snapshot of trade activity, reported by the Commerce Department on Friday, showed that the nation’s trade gap decreased to $59.8 billion, thanks largely to the declining dollar. That was down 1.2% from April’s trade deficit and was the best showing since March.
The improvement came even as imports -- including crude oil -- hit a record high. The trade deficit narrowed in May because exports grew faster than imports. Exports of U.S.-made goods and services totaled an all-time high of $157.6 billion, marking a 0.9% increase from April.
The declining value of the U.S. dollar relative to other currencies, especially the euro, is helping to make U.S. exports cheaper and thus more attractive to foreign buyers.
Growth in exports has been one of the few bright spots for the American economy, which has taken a pounding from housing, credit and financial crises.
Imports of goods and services grew to a record $217.3 billion in May, a 0.3% increase from the previous month.
The trade picture turned out better than many economists had anticipated. They had forecast that the trade gap would widen to $62.2 billion in May.
The stronger export figures should boost overall economic growth during the second quarter, which is shaping up to be better than the grim projections made at the start of the year, when many feared the economy might contract. Tax rebates have been energizing shoppers, which should also help the economy.
“The narrowing trade deficit may be enough to keep second-quarter growth in the black,” said Joel Naroff, president of Naroff Economic Advisors.
The economy could have grown from an annualized rate of 1% to more than 2% in the second quarter, according to various projections.
Still, galloping energy prices are a strain. The average price of imported crude oil soared to a record $106.28 a barrel in May. That pushed the nation’s imported crude oil bill to an all-time high of $31.2 billion. The quantity of imported oil actually fell in May from April.
Crude oil prices hit a record above $147 a barrel on Friday.
The trade deficit with oil-producing nations, including Saudi Arabia, Indonesia, Nigeria and Venezuela, rose to a record $17.9 billion in May.
The United States’ politically sensitive trade deficit with China widened from $20 billion in April to $21 billion in May. Last year, the U.S.’ deficit with China was the largest it had racked up with any country.
