US trade deficit narrows as oil prices fall and exports increase

Ben Southwood
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THE US trade deficit narrowed in May, according to data released yesterday by the Commerce Department.

The trade deficit stood at $48.7bn (£31.3bn) in May, compared to the revised April figure of $50.6bn. This came from exports that inched up $0.4bn, to $183.1bn, and imports that shrunk $1.6bn to $233.3bn.

Michael Moran at Daiwa capital markets said: “Considering the downturn in Europe and the slower pace of growth in developing Asia, the increase in exports could be viewed as encouraging.”

But Paul Ashworth at Capital Economics argued: “The modest narrowing in the US trade deficit was mainly due to a drop in the cost of imported oil.”

“External trade is likely to remain a drag on real US economic growth in the second half of this year and probably through 2013 as well,” he went on to predict.

The estimates for wholesalers’ sales are relatively uncertain, but show a 0.8 per cent drop in May, compared to a 5.7 per cent annualised increase. Inventories were up 0.3 per cent on the month and 6.4 per cent on the year.