Trade Deficit Hits Lowest Level In Nine Years
The U.S. trade deficit for the month of May, fell to the lowest level in more than nine years, as exports posted a small gain, while the weak American economy pushed imports down for the tenth straight month, the Associated Press reports. The slight rebound in exports, combined with a slower pace of decline in imports, showed that the nosedive in global activity may be starting to ebb. Delayed revivals overseas likely will hinder a rebound in the U.S., but most analysts still expect the American economy to grow a bit later this year.
The Commerce Department said the deficit narrowed to $26 billion, a drop of 9.8% from April and the lowest level since November 1999. Economists expected the deficit to widen to $30.2 billion in May. So far this year, the deficit is running at an annual rate of $350 billion, about half of the $695.9 billion deficit for all of 2008. Economists believe that trend will continue as weakness in the U.S. depresses demand for imported goods.
“I think this was a very positive report and consistent with the idea that the U.S. recession will come to an end in the next few months,” said Mark Zandi, chief economist for Moody’s Economy.com.
Canada, America’s largest trading partner, saw their deficit drop to $628 million, the smallest monthly imbalance in 15 years. The deficit with Japan shrank to $1.9 billion, the lowest deficit with that country in more than two decades.
U.S. exports of goods and services rose 1.6% to $123.3 billion in May, reflecting increased sales of soybeans, corn and other farm products, along with higher exports of industrial machinery, generators and computers. But even with the May increase, U.S. exports are 25% below the record-high set in July 2008.
American manufacturers have been hurt by falling domestic demand and weakness overseas, as the recession that began in the U.S. has spread worldwide. Global weakness is expected to continue to depress export sales for companies including Caterpillar Inc., Deere & Co. and Boeing.