The US trade deficit narrowed unexpectedly in May as stronger growth by US trading partners and the weak dollar helped propel exports to record levels, according to government data released yesterday.
Analysts said the smaller-than-expected trade gap will likely boost second-quarter US economic growth. Meanwhile, a trio of other reports painted a mixed picture of consumer spending trends, a key driver of the US economy.
The May deficit totalled $46 billion (€37 billion), well below a median estimate of $48.3 billion from Wall Street analysts surveyed before the report.
The gap narrowed for the first time in six months despite the highest prices for imported oil in nearly 22 years, which helped push overall imports to a record high as well.
Mr Jim Glassman, senior economist with JP Morgan Securities in New York, said the report should prompt forecasters to raise estimates of second-quarter growth by "a half a point or so," depending on the June trade numbers.
US exports jumped nearly 3 per cent to a record $97.1 billion in May, as overseas companies stepped up purchases of capital goods and industrial materials.
The data boosted the dollar against other major currencies and pushed gold prices lower. Treasury bond prices eased on expectations for stronger economic growth.
A separate report shows consumers are increasingly optimistic about the US economy. Investor's Business Daily and TechnoMetrica Market Intelligence said their economic optimism index rose in July to 57.3 from 52.8 in June. - (Reuters)
