Deficit drops in May but still on for record annual high
July 13, 2005
While the US trade deficit showed a dip in May, according to the US Department of Commerce, the reduction is likely a temporary one brought about by temporary drops in the price of oil.
The trade deficit fell by 2.7 percent in May to $55.3 billion. Besides the drop in oil prices for the month, the decline was helped by strong exports, which reached a new high of $106.9 billion.
Export sales of agricultural products, consumer goods, and industrial supplies all hit new record highs in the month. In addition, imports fell by 0.9 percent in May, to $162.2 billion.
A major share of the drop in imports had to do with the lower cost of oil during the month. Despite the fall in the trade deficit in May, the deficit for the year to date is at an annual rate of $681.6 billion, 10 percent higher than the record trade deficit registered in 2004.
Additionally, despite improvements elsewhere, the US trade deficit with China was at its highest level in six months, up 7.1 percent to $15.8 billion.
This circumstance will likely only increase US pressure on China to revalue its currency, which some believe is undervalued by as much as 40 percent.
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