The trade deficit fell in May, reflecting a rise in U.S. exports to the highest level in history and a temporary decline in foreign oil...
WASHINGTON — The trade deficit fell in May, reflecting a rise in U.S. exports to the highest level in history and a temporary decline in foreign oil prices. But the improvement is likely to be short-lived, with oil prices again hovering around record levels.
The Commerce Department said yesterday that America’s trade imbalance declined to $55.3 billion in May, an improvement of 2.7 percent from April.
However, the deficit with China rose to $15.8 billion, the highest since last November, pushed upward by a 12.8 percent surge in imports of Chinese clothing and textiles. In the first five months this year, Chinese clothing and textile shipments are up 53.6 percent from the same period in 2004.
Even with the narrowing of the overall deficit in May, the trade imbalance through this year’s first five months is running at an annual rate of $681.6 billion, 10 percent above last year’s all-time record of $617.6 billion. Analysts say the underlying trends are so strong that the deficits this year and in 2006 will set record highs.
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“There is no question that the deficit this year will be worse than last year. A number of the improvements in May were temporary,” said Nariman Behravesh, chief economist at Global Insight, an economic-forecasting firm in Lexington, Mass.
May’s trade performance was helped by strong export sales, which edged up 0.1 percent to a new record high of $106.9 billion. Sales of agricultural products, industrial supplies and consumer goods all set records.
The improvement in oil came on the price side, with the volume of imports rising. But the average price for a barrel of crude dropped to $43.08, still the second-highest level on record but down from the record $44.76 average per barrel set in April.
The average oil-import price tracked by the government is lower than the spot oil price set in market trading, which hit an all-time settlement high of $61.28 last week.
Analysts predicted the oil bill would swell in coming months by $3 billion or more, reflecting the recent gains in oil prices.
After China, the largest deficits were with Japan, at $6.6 billion, and Canada, at $4.8 billion.
The deficit with the 25-nation European Union totaled $10.5 billion.