America's trade deficit narrowed to $46 billion in May, an improvement brought about as U.S. exports posted their best month on record.
The latest snapshot of trade activity, reported by the Commerce Department on Tuesday, came after the deficit had mushroomed to an all-time monthly high of $48.1 billion in April. The 4.5 percent reduction in the deficit during May represented the largest over-the-month decrease since October 2002. The decline was the first after five straight months of increases.
“It’s nice to have some good news,” said Clifford Waldman, economist at Manufacturers Alliance/MAPI, a reseach group. “Export activity is getting more buoyant.”
The trade deficit figure for May was better than some analysts were expecting. They were forecasting the deficit to hold fairly steady. The narrowing of the gap in May resulted from export growth far outpacing imports, which still climbed to a record high.
Exports of U.S. goods and services rose to a record $97.1 billion in May, representing a sizable 2.9 percent increase from April's level. Exports were helped by a weaker dollar, which makes U.S. goods cheaper for foreign buyers, and some pickup in overseas economies.
Imports, meanwhile, increased by 0.4 percent to $143.1 billion in May, reflecting Americans' voracious appetite for foreign-made goods.
The nation's trade situation has been among the topics that President Bush and his Democratic rival, Sen. John Kerry, have sparred over in the presidential campaign.
Warning of the perils of becoming economic isolationists, Bush says the best way to handle the trade deficits is to get other countries to remove trade barriers and open their markets to U.S. businesses.
But Kerry points to the deficits as evidence that the president's free-trade policies aren't working. Democrats favor having future trade deals include stronger labor and environmental protections and reviewing the impact of existing trade agreements.
In May, U.S. exporters saw demand for a variety of their products increase. Sales of American-made automobiles, engines and parts rose by 1.3 percent, to $7.2 billion, a record high. Industrial supplies, including chemicals and plastic materials, also hit an all-time monthly high of $17.3 billion in May, up from $16.3 billion the month before. Exports of capital goods, such as airplanes and industrial engines, climbed to $28.8 billion, the highest level since March 2001.
On the import side, sales of foreign-made automobiles and parts also hit a record high of $19.4 billion in May, up from nearly $19 billion in April. Imports of foods, feeds and beverages were valued at $5.2 billion in May, also a record.
By country, America's politically sensitive trade deficit with China widened to $12.1 billion in May as imports from China climbed to $15 billion, the second-highest level on record. The record occurred in October 2003, when imports from China totaled $16.5 billion.
The Bush administration has been pressing Beijing to stop linking its currency to the dollar and to let the value of the yuan be set in open markets.
The U.S. trade deficit with Japan narrowed to $5.5 billion in May, compared with $6.4 billion in April. The deficit with Canada also narrowed to $4.8 billion from $5.6 billion.
America's deficit with oil-producing countries, including Saudi Arabia and Venezuela, widened to a record high of $5.6 billion in May. The average price of imported crude oil, meanwhile, rose to $33.12 a barrel, the highest since July 1982.