US trade deficit narrowed by more than expected in May

Thursday 03 July 2014 13.51
There was a surge in exports during the month, particularly in the country's car industry
There was a surge in exports during the month, particularly in the country's car industry

The US trade deficit narrowed a bit more than expected in May as exports jumped to a record high, suggesting trade could be less of a drag on second quarter growth than earlier feared.

The country’s Commerce Department said the trade gap fell 5.6% to $44.4bn. 

April's trade deficit was revised slightly down to $47bn.

Economists polled by Reuters had expected the deficit to narrow to $45bn in May from a previously reported $47.2bn shortfall.

When adjusted for inflation, the deficit narrowed to $51.96bn from $53.88bn in April.

Trade subtracted 1.5 percentage points from first-quarter gross domestic product. The economy contracted at a 2.9% annual pace in the first three months of the year.

In May, exports increased 1% to a record high of$195.5bn. 

Exports were driven by a surge in automobiles, parts and engines, which rose to a record high. 

Exports of consumer goods were also the highest on record.

Imports fell 0.3% to $239.8bn as petroleum imports tumbled to their lowest level since November 2010.

Non-petroleum imports, however, hit a record high in May.

That points to an acceleration in domestic demand, which cannot be satisfied with locally produced goods, and is consistent with expectations of a rebound in growth in the second quarter.

The politically sensitive trade gap with China rose to $28.8bn from $27.3bn in April.