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Trade Gap for United States Shrinks
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Concerns regarding a global economic slowdown were reduced as the United States trade deficit decreased in the month of May. Exports to Europe and China increased during May as well. The trade deficit fell by 3.8 percent to $48.7 billion in the month of May, according to the Commerce Department. That number is down from $50.6 billion in the month of April.

Exports increased by 0.2 percent to $183.1 billion, which were reflected by increased sales of telecommunications equipment and heavy machinery. There was a decline of 0.7 percent in imports to $231.8 billion. The foreign oil bill for the United States fell to its lowest level in 15 months. Economists believe that economic growth slowed down in the second quarter of 2012, causing companies to hold back hiring for fear of the debt crisis in Europe and the plans for belt tightening by the U.S. government in 2013.


“At least as of May the situation in Europe wasn’t leading to some kind of collapse in trade,” said David Resler, an economist at Nomura Securities in New York.

Exports increased in capital goods, industrial supplies and consumer goods. The increase in exports was 0.2 percent while imports fell 0.7 percent.

“While the positive momentum in export activity provides some encouragement on the tone of overall global economic activity, it is unlikely to be sustained in the coming months,” said Millan Mullraine, an economic strategist at TD Securities in New York.

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A private survey released earlier in July showed that activity in U.S. factories decreased in the month of June as new orders decreased. Wall Street trading was not affected by the data as gains were held onto by futures for U.S. stocks. Yields on 10-year government debt stayed close to their 5-1/2 week lows.

The European Union, made up of 27 nations, is still struggling through a debt crisis that continues to slow growth around the world. Exports from the U.S. to those 27 nations increased by 2.6 percent in the month of May to $22.9 billion. The second largest export market for the United States in 2011 was the European Union. Exports for the United States for the first five months of 2012 were three percent above the same time frame in 2011.

Exports from the United States to China increased by 5.2 percent in May as China continues to be one of the fastest growing markets for goods from the U.S. Compared to the first five months of 2011, exports to China increased by 6 percent in the first five months of 2012. The trade deficit for the United States with China widened in May to $26 billion from $24.6 billion in April. The reason for this is that imports from China have increased quicker than exports to China.



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