U.S. trade deficit narrows in May on oil improvement; China gap widens
U.S. Business and Industry Council -- Manufacturing Business Technology, 7/16/2008 9:15:00 PM
The U.S. trade deficit narrowed slightly in May, from $60.50 billion to $59.79 billion. Breaking the recent pattern, the nation’s deficit in oil shrank by 4.89 percent, to $33.15 billion, but the non-oil goods deficit rose 6.17 percent to $38.02 billion—its highest level since last November. Moreover, America’s chronic goods deficits with all its major trading partners fell in May, save for China, where the gap rose by 4 percent to $21.05 billion.
Exports and imports alike hit new records in May in the combined, goods, and services categories. Total exports rose three times faster than total imports (0.89 percent versus 0.32 percent), but these changes were not remotely large enough to affect the overall deficit significantly.
The same situation was apparent is goods trade. As a result, the Jan.-May 2008 total trade deficit is only 1.38-percent lower than the figure for the comparable 2007 period, despite a much more sluggish U.S. economy.
As a result, observes U.S. Business and Industry Council Research Fellow Alan Tonelson, “Thanks to his fondness for outsourcing-focused trade agreements and refusal to combat China’s trade cheating, President Bush will undoubtedly leave his successor with the biggest trade mess and the most trade debt in American history. Unfortunately, the Democratic Congress’ overall ‘me, too’ position deserves much of the blame as well.
“If the next president wants an economy good enough to justify reelection,” Tonelson continues, “he had better start planning major surgery for U.S. trade policy now.”
The U.S. manufacturing trade deficit decreased in May as well, by 6 percent, to $44.77 billion, as exports increased 2.32 percent and imports actually fell by 0.78 percent. On a year-to-date basis, the manufacturing deficit fell 8.88 percent in May—from $242.77 billion to $226.20 billion. Exports are up 11.66 percent during this period—to $390.13 billion—but much higher import levels have risen as well, by 4.08 percent to $616.33 billion.
The always volatile trade balance in advanced technology products nosedived in May by 33.15 percent, to $3.5 billion. Advanced technology exports increased 2.82 percent while imports dropped by a significant 3.86 percent. In April, the Advanced Technology Deficit jumped by more than 62 percent, and the year-to-date May 2008 level is still slightly higher than the comparable figure for 2007.
The U.S. goods trade deficits with Canada, Mexico, the Eurozone, and Japan all fell in May—largely due to falling U.S. imports. The big exception was China: U.S. goods exports to the booming People’s Republic resumed their growth in May, expanding by 16.42 percent, to $6.61 billion. But U.S. goods imports increased by 6.73 percent, to $27.66 billion.
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