(Bloomberg) -- The U.S. trade deficit narrowed in May to itssmallest since October 2016 on a jump in exports of soybeans andaircraft amid the threat of retaliatory tariffs.
The gap decreased 6.6 percent to $43.1 billion, from a revised$46.1 billion in the prior month, Commerce Department datashowed Friday. Exports of goods and services climbed to a recordhigh, outpacing a pickup in imports.
The trade data will remain closely watched for signs of anyfallout from what threatens to become a protracted trade warwith China, Europe and Canada. At the same time, rising demandby U.S. households and businesses means purchases of foreign-made goods will probably remain resilient in coming months.
President Donald Trump has already imposed levies on importedsteel, aluminum, solar panels and washing machines. Tariffs on$34 billion of Chinese goods took effect Friday at 12:01 a.m. inWashington, spurring retaliation from China.
The median estimate of economists surveyed by Bloomberg calledfor a May trade deficit of $43.6 billion.
The report also showed the trade gap with China, the world'ssecond-biggest economy, widened to $32 billion in May from $30.8billion.
Overall exports increased 1.9 percent to $215.3 billion assoybean shipments overseas almost doubled to $4.1 billion.Exports of civilian aircraft, a category that tends to bevolatile, rose $1.9 billion in May.
Imports rose 0.4 percent to $258.4 billion, boosted by a recordvalue of capital goods shipments from overseas.
Improvement in the trade gap may be a positive for second-quarter growth. Net exports subtracted 0.04 percentage pointfrom gross domestic product growth of 2 percent over theJanuary-to-March period, according to revised figures, whileprevious estimates had shown a modest contribution.
Other Details
- After eliminating the influence of prices, which renders the numbers used to calculate GDP, the trade deficit shrank to $75.3 billion, the smallest since March 2017, from $77.5 billion in the prior month
- Exports and imports of goods accounts for about three-fourths of America's total trade; the U.S. typically runs a deficit in merchandise trade and a surplus in services
©2018 Bloomberg L.P.
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