The U.S. trade deficit shrank in May on a sharp decline in imports, according to government data released on Thursday, after rising to a record high a month earlier.
The Federal Reserve paused interest rate hikes last month to give policymakers more time to assess incoming U.S. economic data, after raising them 10 times in a row to tackle high inflation.
But despite its aggressive moves, inflation remains well above the Fed's long-term target of 2%, while the labor market remains tight.
Analysts, traders and Fed officials expect additional rate hikes will be necessary in the months ahead to suppress demand sufficiently to bring inflation back down to target.
"A weaker trend could persist owing to the effects of monetary policy tightening globally, which is likely to slow demand and economic activity domestically and abroad," High Frequency Economics' chief U.S. economist Rubeela Farooqi wrote in a note to clients.
In May, the overall trade deficit fell to $69 billion, down from a revised $74.4 billion a month earlier, according to the Commerce Department.
The deficit came in slightly higher than the median forecast of economists surveyed by MarketWatch.
Exports fell slightly to $247.1 billion, while imports shrank by $7.5 billion to $316.1 billion.
Much of the decline in imports came from a fall in consumer goods, which fell by $4.8 billion.
The U.S. trade deficit in goods with China increased in May to $24.9 billion, on a seasonally-adjusted basis, according to the Commerce Department. This was up from $24.2 billion in April.
Copyright 2023, Agence France-Presse
