Washington: The US trade deficit widened in May as USD 71.2 billion as a small increase in exports was offset by a bigger rise in imports.
The Commerce Department reported Friday that the deficit rose 3.1 per cent from the revised April deficit of USD 69.1 billion The US trade deficit had hit a monthly record of USD 75 billion in March.
In May, exports of US goods and services rose 0.6 per cent to USD 206 billion. But that was offset by a 1.3 per cent gain in imports which hit USD 277.3 billion.
Through the first five months of this year, the US trade deficit totals USD 353.1 billion, up a sizable 45.8 per cent from the deficit during the same period last year when Americans’ appetite for imported goods was being held back by the pandemic.
This year, the improving US economy has increased demand for imports while the rest of the world has been recovering more slowly, dampening demand for US exports. The trade deficit is the gap between what America sells abroad and what the country imports.
The deficit in goods totaled USD 89.2 billion in May and this was offset by a smaller USD 17.9 billion surplus in services such as airline travel. Since the pandemic, the US services surplus has been shrinking given the pandemic’s impact on travel while the goods deficit has been rising as American consumption patterns were altered in favour of more goods purchases.
But analysts think that trend will revert back to more normal patterns in coming months as the impacts of the pandemic lessen.
As pandemic distortions dissipate and global economies restart more completely, imports and exports will likely rebalance with support from services, said Rubeela Farooqi, chief US economist at High Frequency Economics.