The US trade deficit narrowed unexpectedly in May to $55.3 billion as exports rose slightly to a record and imports retreated a bit from the record set in April, a US government report showed today.
The smaller-than-expected trade gap suggested stronger-than-expected US economic growth in the second quarter and could help persuade the Federal Reserve to remain on a path of steadily rising interest rates.
The monthly trade gap narrowed about 2.7 per cent from April according to the Commerce Department report, defying the median estimate of analysts surveyed before the report who expected it to remain mostly unchanged at about $57.0 billion.
While the deficit was still within sight of the $60.1 billion record set in February, the unexpected narrowing in May helped boost the value of the dollar in early trading.
The dollar rallied today, extending gains after the trade data eased concerns about the US external financing problems.
US Treasury debt prices were barely changed after trade deficit data. The dollar was under pressure against the euro earlier this week after China released its own trade figures for June, showing a wider-than-expected surplus.
That fueled last minute speculation the US trade gap for May could be wider than expected.
The trade deficit with China, a hot-button issue in the US Congress, swelled 7.1 per cent in May to $15.8 billion.
But that was offset by narrower trade gaps with Japan, Canada, Britain and France. Exports in several key categories - such as food, feed and beverages, consumer goods and industrial supplies and materials - rose slightly to records.
US exports of services also set a record, as did imports in that category. Overall exports totaled a record $106.9 billion, up slightly from a revised estimate for April.
It was the sixth consecutive month that US exports have been above $100 billion since first passing that threshold in December.
US imports remained near record levels at $162.2 billion, down less than 1 percent from the previous month. Imports from members of the Organization of Petroleum Exporting Countries were a record $9.8 billion.
Average prices for imported oil were the second highest on record in May at $43.08 per barrel, down from a record $44.76 in April.