US trade gap narrows to $49bn as exports rise

 

The US trade deficit narrowed slightly in May as a rise in exports, including those bound for Europe and China, eased the pain of a slowdown in the broader economy, a government report showed on Wednesday.


Exports have been a key support for the economy since the recession.

The gap shrank 3.8pc to $49bn (£31bn), the US Commerce Department said. Cheaper oil from abroad also helped reduce the trade deficit.

American companies slammed the brakes on hiring in the second quarter, a warning sign the recovery from the 2007-2009 recession is faltering.

Many economists think economic growth slowed in the second quarter, with companies holding back due to fears of Europe's debt crisis as well as US government plans for severe belt tightening in 2013.

Exports have been a key support for the economy since the recession.

"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 climbed 0.2pc, rising across categories from capital goods and industrial supplies to consumer goods. Imports fell 0.7pc.

Still, Europe's problems and signs of cooling growth in China suggest demand from abroad might weaken.

"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.

Earlier this month, a private survey showed activity at US factories declining in June, with new orders falling, including those for exports.

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