- POSTED: 03 Jul 2014 22:39
- UPDATED: 04 Jul 2014 03:17
The US trade gap narrowed more than five per cent in May on record exports, indicating the US economy is benefiting from a strengthening global recovery, official data released Thursday showed.
WASHINGTON: The US trade gap narrowed more than five per cent in May on record exports, indicating the US economy is benefiting from a strengthening global recovery, official data released Thursday showed.
The nation's chronic trade deficit in goods and services fell to US$44.4 billion in May, down from a revised shortfall of US$47.0 billion in April, the Commerce Department said.
The decline, following five straight months of increases, was larger than expected by analysts, who estimated a US$45.2 billion May deficit. In April, the gap had widened sharply to the widest level in two years.
Exports of goods and services jumped 1.0 per cent in May to US$195.5 billion, with large gains in exports of automobiles and consumer goods.
US goods exports hit an all-time high of US$135.7 billion, as automobile exports climbed to a fresh record of US$13.5 billion.
"The improvement in US exports seen in the May trade data suggests that the world economic recovery is gaining traction," said Tu Packard of Moody's Analytics.
Imports edged down 0.2 per cent in May to US$239.8 billion, almost all of them in goods.
Petroleum imports dropped 5.0 per cent to a nearly four-year low of US$28.5 billion. Crude oil imports plunged 9.6 per cent to US$19.8 billion amid a boom in domestic oil and gas output driven by shale production.
The politically sensitive US trade gap with China grew to US$28.8 billion from US$27.3 billion in April. The United States long has criticized China for keeping its yuan currency undervalued, making Chinese exports cheaper.
The trade data came ahead of high-level US-China talks in Beijing next week and was expected to fuel additional pressure on Beijing to allow the yuan to trade more freely.
Treasury Secretary Jacob Lew, who will lead the US delegation with Secretary of State John Kerry at the Strategic and Economic Dialogue on July 9-10, said this week that China should allow the yuan to trade at a market-determined foreign exchange rate. "It's fundamentally not fair in terms of trading practices."
The US trade deficit with the European Union shrank 3.0 per cent to US$12.8 billion in May.
The US currently is negotiating with the 28-nation EU a proposed Transatlantic Trade and Investment Partnership, an ambitious free-trade and investment zone that Washington hopes will further open up the European market to US exports.
Moody's Packard projected US exports would rise by 3.6 per cent in 2014 and imports by 4.1 per cent as the world economy grows and the US economy expands at a moderate pace.
"The primary risk to the outlook stems from geopolitical tensions in Ukraine, Central Asia, and the South China Sea that could lead to missteps with unintended consequences for the global economic recovery," she said.