3 July 2013, 17:46  U.S. Trade deficit widens

With exports falling and imports rising, the Commerce Department released a report on Wednesday showing that the U.S. trade deficit widened by much more than anticipated in the month of May. The report said the trade deficit widened to $45.0 billion in May from a revised $40.1 billion in April. Economists had expected the deficit to widen to $40.8 billion. The wider than expected trade deficit recorded in May was the widest since the deficit hit $46.4 billion in November of 2012. A 0.3 percent decrease in the value of exports contributed to the wider deficit along with a 1.9 percent jump in the value of imports. Paul Dales, Senior U.S. Economist at Capital Economics, said, "While the weak global backdrop appears to be weighing on exports, the slightly stronger domestic economy is supporting imports." "This is reflected in the widening in the bilateral trade deficit with China, to $27.9 billion from $24.1 billion," he added. The Commerce Department noted that the goods deficit widened to $63.4 billion in May from $58.4 billion in April, while the services surplus edged up to $18.4 billion from $18.3 billion. Dales noted that the real trade deficit, which is adjusted for inflation, widened to $52.3 billion in May from $47.4 billion in April. "Even after allowing for a partial reversal in June, that could mean net trade subtracted around 1.0 percentage points from second-quarter annualized GDP growth," Dales said. "We had been expecting a more modest drag of 0.4 percentage points."

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