The US trade deficit narrowed in May to its lowest level for the year, reflecting a rebound in exports of goods and services.
The gap narrowed by $1.1 billion, or 1.3%, from the previous month, to $85.5 billion, according to Commerce Department data released Thursday. The median estimate in a Bloomberg survey of economists was for a deficit of nearly $85 billion. Figures have not been adjusted for inflation.
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Export value of Goods and Services It increased 1.2% to $255.9 billion while imports rose 0.6% to $341.4 billion.
The trade gap that narrowed in successive months could help give a boost to GDP in the second quarter. In the first quarter, the increase in the deficit reduced 3.2 percentage points of GDP, one of the largest negative shocks on record.
Based on the rate of inflation trade deficit Merchandise trade in May was little changed at $116.6 billion. In March, the deficit was $135.5 billion.
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The rise in exports reflects a record value of goods shipped abroad. Exports of industrial supplies and consumer goods rose in May.
The trade deficit US merchandise trade with China in May expanded to $31.5 billion on an unadjusted basis, while the country’s imports rose 5% to $43.9 billion.
Inflation, which is at its highest levels in several decades, is expected to affect global demand for goods, potentially weakening business activity in two directions. However, freight orders arriving at West Coast ports continue to rise, indicating that imports – still above pre-pandemic levels – will remain elevated in the coming months as marketers prepare for the holiday shopping season.