U.S. trade deficit slims unexpectedly on record exports -
Wednesday, July 13, 2005 2:18:20 PM
afxpress.com
WASHINGTON (AFX) -- Stronger demand for U.S. products overseas and lower energy costs at home helped to reduce the trade deficit in May, the Commerce Department said Wednesday
The trade deficit narrowed 2.8% in May to $55.3 billion, and was below the consensus forecast of Wall Street economists of $57.0 billion. The deficit has stabilized after setting a record of $60.1 billion in February
As a result, economists expect net exports to start contributing positively to gross domestic product in the second quarter. The trade gap subtracted 0.6 of a percentage point from first-quarter GDP growth
Jay Feldman, economist at Credit Suisse First Boston, said the trade report caused him to raise his second-quarter growth estimate to 3.8% from his earlier estimate of 3.2%
The Commerce Department also revised the trade deficit for April slightly lower, to $56.9 billion from an initial estimate of $57 billion
May's exports reached a new record, while imports slipped. In particular, exports rose 0.2% to $106.9 billion, with imports falling 0.9% to $162.2 billion
Exports of agricultural products, consumer goods and industrial supplies increased in May
The increase in exports is impressive in part because it came despite a drop in exports of civilian aircraft. Exports in this volatile sector fell 28.4% to $2.3 billion
Imports of goods alone fell 1.2% to $135.3 billion. The decline in imports was led by industrial supplies, primarily crude oil, and by capital goods
Imports of consumer goods remained strong in May, rising 0.7% to $34.0 billion
Robert Brusca, chief economist at FAO Economics, said the sluggish trend in imports could be a bad sign, implying weak domestic demand
Ian Shepherdson, chief U.S. economist at High Frequency Economics, said imports ex-oil and aircraft have stalled since January. "Only part of this can be blamed on softer domestic demand; the rest is a bit of a mystery," Shepherdson said
Mixed energy picture The nation's petroleum deficit narrowed 8.7% to $15.8 billion, the lowest level since January. Some of this may be due to lower prices for imported oil last month: The average price per barrel of oil fell to $43.08 in May from a record $44.76 in April
The U.S. imported 318.6 million barrels of crude oil in May, equating to 10.3 million barrels per day, up from 313.8 million in April
The U.S. trade deficit with China widened to $15.8 billion in May compared with $14.7 billion in April and $12.2 billion in May 2004
Some analysts weren't impressed by the narrowing deficit. They noted that much of the improvement in May was due to the lower cost of oil, which would only be a temporary cure
Indeed, in a separate report, the Labor Department said import prices rose in June on a rebound in crude-oil prices |
