U.S. Trade Deficit Tops $50 Billion

The world's largest oil-consuming country bought foreign oil at an average price of $108.70 a barrel, the highest level since August 2008, a month after oil prices had hit an all-time peak.

The trade deficit widened sharply in May, topping $50 billion for the first time since October 2008.

The trade gap expanded to a seasonally adjusted $50.2 billion from a downwardly revised $43.6 billion in April, according to figures released by the Commerce Department.

Most analysts had expected the gap to increase only marginally in May, to around $44 billion, after the April deficit shrank to the lowest level of the year, reflecting the impact on U.S. supply chains of Japan's earthquake and tsunami disaster.

But figures showed imports rose 2.6% in May, led by a 9% surge in oil imports as crude oil prices spiked.

The world's largest oil-consuming country bought foreign oil at an average price of $108.70 a barrel, the highest level since August 2008, a month after oil prices had hit an all-time peak.

The trade gap on petroleum products reached the biggest shortfall since October 2008, at $30.4 billion.

Apart from petroleum products, demand for foreign goods edged up only 0.5%. Imports of consumer goods fell 2.3%.

However, imports of industrial equipment rose 2.6% and Americans snapped up 4.9% more foreign automobile goods.

U.S. exports, which hit a record high in April, fell 0.5% in May. But they remained at the second-highest level in the department's records, at $174.9 billion.

The big May deficit was still not close to the country's record deficit of $67.4 billion set in August 2006.

Since then, the world's biggest economy has been bolstered by exports to rapidly growing emerging-market economies.

Obama's Export Plan on Track

With the U.S. economy struggling to regain momentum after the worst recession in decades, President Obama announced in January 2010 a strategy to double exports over the next five years, estimated at an average clip of 15% a year.

So far the plan is on track. Exports grew at an average pace of 16.7% in 2010 and, in the first five months of 2011, have increased 16.3%.

Still, in May, the United States saw significant widening in trade shortfalls with Canada, its largest trading partner, and with China, its second-largest partner.

According to data that was not seasonally adjusted, the gap with Canada rose to $2.7 billion.

The gap with China hit $25 billion in May and appeared well on the way this year to beating its 2010 record. The trade gap with the 17-nation eurozone rose to $7.6 billion.

Copyright Agence France-Presse, 2011

TAGS: The Economy
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