With imports increasing by much more than exports, the Commerce Department released a report on Friday showing the U.S. trade deficit widened in the month of May.
The Commerce Department said the trade deficit widened to $71.2 billion in May from a revised $69.1 billion in April.
Economists had expected the trade deficit to widen $71.4 billion from the $68.9 billion originally reported for the previous month.
The wider trade deficit came as the value of imports jumped by 1.3 percent to $277.3 billion in May from $273.8 billion in April.
A sharp increase in import of industrial supplies and materials helped offset a notable decrease in imports of capital goods such as computers.
Meanwhile, the report showed the value of exports rose by 0.6 percent to $206.0 billion in May from $204.7 billion in April.
Exports of pharmaceutical preparations saw a significant increase, but the jump was partly offset by decreases in exports of passenger cars and civilian aircraft.
“Robust domestic demand, powered by the wider reopening of the economy and greatly improved health conditions, underpinned another solid rise in imports,” said Kathy Bostjancic, Chief U.S. Financial Economist at Oxford Economics. “Export demand is less vigorous reflecting softer foreign demand.”
She added, “The trade deficit is poised to remain wide as the fiscally powered, consumer driven recovery in the U.S. runs ahead of the global economic rebound.”
The Commerce Department said the goods deficit widened to $89.2 billion in May from $86.9 billion in June, while the services surplus inched up to $17.9 billion from $17.8 billion.
Source: Read Full Article