The Commerce Department reported on Friday the U.S. trade deficit in goods and services declined to $59.8 billion in May from $60.5 billion in April. Economists expected a trading gap deficit of $62.5 billion.
During the March-May period, exports averaged $154.8 billion, while imports averaged $213.7 billion, thus the $59.8 billion in average trade deficit.
May exports increased $1.4 billion and were up $23.9 billion — almost 18% higher on a year-over-year basis. The gain in exports for the month of May was primarily driven by fuel oil, chemical fertilizers, and other petroleum products.
May imports were $0.7 billion more than April imports of $216.7 billion. This is a relatively small rise when compared with the large spike we experienced in April. Imports were up $24.2 billion — 12.5% higher versus a year ago. With oil trading now above $135 p/bl, the cost of imports is likely to rise further in coming months.
The weaker dollar and a high demand overseas continues to boost U.S. exports. The “export” factor is adding significantly to real GDP growth. Meanwhile, imbalance in global trade remains a problem, as the deficit with China showed. It stood at $21.0 billion in May – by far the largest deficit with any single country, followed by OPEC $17.9 bln and the European Union $7.9 bln.
Today’s report on declining trade deficit numbers, further reinforces the idea — that tax rebates are not the main reason for keeping our economy out of recession. The fact is – the trade sector is largely contributing to economic growth, not consumption.