Oil and exports trim US trade gap
Source: Agencies |
July 12, 2012, Thursday
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Print Edition
Print Edition
THE US trade deficit narrowed in May from April, helped by cheaper oil that lowered imports and an increase in American exports to Europe and China.
But economists cautioned that the decline wasn't enough to alter weak growth forecasts for the April-June quarter.
The Commerce Department yesterday said the trade gap fell 3.8 percent to US$48.7 billion in May, down from US$50.6 billion in April.
Exports rose 0.2 percent to US$183.1 billion. The increase reflected stronger sales of telecommunications equipment and heavy machinery.
Imports fell 0.7 percent to US$231.8 billion. The US foreign oil bill fell to the lowest level in 15 months.
A narrower trade gap is less of a drag on growth. It means the US is spending less on foreign-made products, while taking in more from sales of US-made goods.
The increase in exports to the second-highest level on record is a hopeful sign for growth.
Still, US manufacturing has weakened this spring, hurt by Europe's financial crisis and slower growth in China.
The sluggish US job growth and meager pay increases have also made American consumers more cautious about spending, which drives roughly 70 percent of economic activity.
The US' trade deficit with China rose to US$26 billion in May. US exports to China rose 5.2 percent, and imports climbed by a faster 5.8 percent.
Paul Ashworth, chief US economist at Capital Economics, doesn't expect growth picking up from January-March's tepid 1.9 percent annual pace. He's predicting annual expansion of between 1.5 percent and 2 percent in the April-June quarter.
Lower oil prices were the main reason for the narrower deficit in May, he said. Further price declines should narrow deficits further in June and July.
US export growth has slowed and will slow further "given the sharp slowdown in economic growth in Europe and Asia," Ashworth said.
But economists cautioned that the decline wasn't enough to alter weak growth forecasts for the April-June quarter.
The Commerce Department yesterday said the trade gap fell 3.8 percent to US$48.7 billion in May, down from US$50.6 billion in April.
Exports rose 0.2 percent to US$183.1 billion. The increase reflected stronger sales of telecommunications equipment and heavy machinery.
Imports fell 0.7 percent to US$231.8 billion. The US foreign oil bill fell to the lowest level in 15 months.
A narrower trade gap is less of a drag on growth. It means the US is spending less on foreign-made products, while taking in more from sales of US-made goods.
The increase in exports to the second-highest level on record is a hopeful sign for growth.
Still, US manufacturing has weakened this spring, hurt by Europe's financial crisis and slower growth in China.
The sluggish US job growth and meager pay increases have also made American consumers more cautious about spending, which drives roughly 70 percent of economic activity.
The US' trade deficit with China rose to US$26 billion in May. US exports to China rose 5.2 percent, and imports climbed by a faster 5.8 percent.
Paul Ashworth, chief US economist at Capital Economics, doesn't expect growth picking up from January-March's tepid 1.9 percent annual pace. He's predicting annual expansion of between 1.5 percent and 2 percent in the April-June quarter.
Lower oil prices were the main reason for the narrower deficit in May, he said. Further price declines should narrow deficits further in June and July.
US export growth has slowed and will slow further "given the sharp slowdown in economic growth in Europe and Asia," Ashworth said.
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