US May trade deficit narrows on exports, cheaper oil
WASHINGTON, July 11 – The US trade deficit narrowed slightly in May as a rise in exports, including those bound for Europe and China, eased the pain of a slowdown in the broader economy, a government report showed today.
The gap shrank 3.8 per cent to US$48.7 billion (RM154.82 billion), the US Commerce Department said. Cheaper oil from abroad also helped reduce the trade deficit.
American companies slammed the brakes on hiring in the second quarter, a warning sign the recovery from the 2007-2009 recession is faltering.
Many economists think already anaemic economic growth slowed further in the second quarter, with companies holding back due to fears of Europe’s debt crisis as well as US government plans for severe belt tightening in 2013.
Exports have been a key support for the economy since the recession.
“At least as of May the situation in Europe wasn’t leading to some kind of collapse in trade,” said David Resler, an economist at Nomura Securities in New York.
Exports climbed 0.2 per cent, rising across categories from capital goods and industrial supplies to consumer goods. Imports fell 0.7 per cent.
Still, Europe’s problems and signs of cooling growth in China suggest demand from abroad might weaken.
“While the positive momentum in export activity provides some encouragement on the tone of overall global economic activity, it is unlikely to be sustained in the coming months,” said Millan Mulraine, an economic strategist at TD Securities in New York.
Earlier this month, a private survey showed activity at US factories declining in June, with new orders falling, including those for exports.
The overall reading for the trade deficit was in line with expectations so it probably won’t make a big impact on analysts’ views of second-quarter growth.
The data did not appear to affect trading on Wall Street. US stocks opened slightly higher, while Treasury debt prices were little changed.
A separate report from the Commerce Department showed wholesale inventories edged higher in May despite a big drop in stocks of oil.
US exports to the 27-nation European Union, in the grip of a continuing debt crisis that has slowed growth around the world, rose 2.6 per cent in May to US$22.9 billion.
The EU collectively was the United States’ second largest export market last year, and exports in the first five months of 2012 were 3 per cent above the same period in 2011.
Europe’s crisis continues to fester, and today Spanish Prime Minister Mariano Rajoy announced a swathe of new taxes and spending cuts to meet tough targets agreed with Europe.
US exports to China rose 5.2 per cent in May. China has been one of the fastest growing markets for US goods, and exports to that country were up 6 per cent for the first five months of 2012 from the year-ago period.
Imports from China have been increasing at an even faster pace than exports, and in May America’s trade deficit with China widened to US$26 billion from US$24.6 billion a month earlier.
A fall in the price of oil helped drive the overall reduction in US imports. The average price of imported oil slipped to US$107.91 per barrel.
Even though exports to Europe rose, the flow of imports grew even more, pushing the trade deficit with the European Union to US$10.5 billion, the highest since July 2008. – Reuters