The gap between imports and exports decreased 9.8 percent to $26 billion, the smallest deficit since November 1999, from a revised $28.8 billion in April that was lower than previously estimated, the Commerce Department said today in Washington. Imports fell while exports rose the most since July 2008.
A shrinking deficit signals trade will contribute more to U.S. gross domestic product as exports to emerging economies such as Brazil increase. Meanwhile, U.S. demand for imported auto parts was held down in May by production cutbacks and factory shutdowns by Detroit-based General Motors Corp. and Chrysler LLC, based in Auburn Hills, Michigan, two of the nation’s three largest automakers.
Exports rose 1.6 percent, the biggest increase since July 2008, to $123.3 billion, as sales of petroleum products, chemicals and industrial machinery increased. Exports this year have gotten a boost from aircraft manufacturers. Chicago-based Boeing Co., the world’s second biggest commercial-plane maker, said it got 20 orders in May, up from 17 in April.
Imports fell 0.6 percent to $149.3 billion after decreasing the prior month. The import figures were held down by a decline in purchases of foreign crude oil to $12.9 billion from $13.8 billion, reflecting lower demand for petroleum even as prices rose. The cost of imported oil averaged $51.21 a barrel, up from $46.60 in April, according to today’s report. Oil prices have been falling since June 11.
Prices of goods imported into the U.S. rose 3.2 percent in June, the fourth monthly increase, as oil costs jumped by the most in a decade, a separate government report showed today.
Imports of industrial supplies, which include crude oil, fell by $656 million to $33.1 billion. Demand for consumer goods from abroad was little changed at $35.5 billion.
After eliminating the influence of prices the trade deficit narrowed to $36.2 billion from $40.1 billion. Those numbers are used to calculate gross domestic product.
The trade gap with China increased to $17.5 billion from $16.8 billion in the prior month. Deficits with Canada, Mexico and Japan shrank. The deficit with the European Union fell 48 percent to $2.8 billion as demand for European goods declined.
While symptomatic of global weakness, the narrowing of the trade gap prevented the U.S. economy from contracting even more last year. Trade contributed 1.4 percentage points to growth in 2008, the most since 1980.
The boost to U.S. growth from net exports continues this year. The economy shrank at a 5.5 percent annual rate in the first quarter, even as net exports made a positive contribution of 2.4 percentage points.