U.S. Trade Gap Narrows as Exports Rise to Highest in Two Years

The U.S. trade deficit narrowed in May as American companies exported the most since April 2015, underscoring an improving global economy, Commerce Department data showed Thursday.

Highlights of Trade Balance (May)

  • Gap decreased 2.3% to $46.5b (est. $46.3b) from $47.6b in April
  • Exports rose 0.4% to $192b on increased shipments of cars and consumer goods
  • Imports fell 0.1% to $238.5b as cooler demand for autos and consumer merchandise offset record shipments of capital goods

Key Takeaways

Further improvements in economies around the world are helping drive demand for U.S. exports. In May, merchandise exports to South Korea were the highest on record, while shipments to Brazil were the strongest since October 2014.

Weakness in the dollar could also make American-made goods more attractive for overseas customers, helping to contain the trade gap that barely added to growth in the first quarter.

At the same time, a record $52.8 billion of imported capital equipment indicates U.S. business investment may be gaining momentum. The report also showed the impact of weakening motor vehicle sales as imports of new and used cars dropped by $1.3 billion in May.

Other Details

  • After eliminating the effects of price fluctuations, which generates the numbers used to calculate GDP, the gap shrank to $62.8 billion from $63.8 billion
  • Politically sensitive merchandise trade deficit with Mexico widened to $7.3 billion, the largest since October 2007; gap with China expanded to $31.6 billion (unadjusted)
  • Excluding petroleum, the deficit in goods and services narrowed to $40.3 billion in May from $42.1 billion

— With assistance by Chris Middleton

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