US trade deficit falls in May

The US trade deficit for May turned out lower than most economists expected.

The U.S. Census Bureau and the U.S. Bureau of Economic Analysis, through the Department of Commerce, announced today that total May exports of $106.9 billion and imports of $162.2 billion resulted in a goods and services deficit of $55.3 billion, $1.6 billion less than the $56.9 billion in April, revised. May exports were $0.2 billion more than April exports of $106.7 billion. May imports were $1.4 billion less than April imports of $163.6 billion.

However, an AP report points out that the deficit with China rose to US$15.8 billion, the highest since last November. Furthermore, the fall in the deficit mainly reflected a US$1.3 billion decline in the oil bill following falls in oil prices in May. With oil prices rising again, analysts expect the deficit to set new record highs this year and in 2006.

In the blogosphere, Brad Setser, General Glut and The Prudent Investor also analysed the trade data and all agree that the trade deficit is set to get worse.