Joseph Bonney | Jul 13, 2010 11:19AM EDT
The U.S. trade deficit widened in May to the highest level in 18 months as a renewed consumer appetite for foreign-made products pushed imports up 2.9 percent, outstripping a 2.4 percent rise in exports.
The trade deficit increased 4.8 percent from April to $42.3 billion, the largest imbalance since November 2008, the Commerce Department reported.
Through May, the U.S. trade deficit is running at an annual rate of $474.8 billion, up 26.6 percent from the $374.9 billion deficit for all of 2009. Last year’s deficit was the lowest annual trade gap since 2001, another year when the country was in recession.
The increased May deficit came despite a 9.1 percent drop in oil imports to $27.6 billion as oil prices and shipment volume declined slightly.
Imports rose 2.9 percent to $194.5 billion, the highest level since October 2008, reflecting increased imports of cars, clothing, computers, oil drilling equipment and industrial machinery.
The 2.4 percent rise in exports in May compared to April pushed sales of American goods and services to $152.3 billion, the highest level since September 2008. Sales of soybeans, wheat and other farm products were down but demand for American-made autos, industrial machinery, medical equipment and commercial aircraft all increased.
The deficit with the European Union rose 7.5 percent to $6.2 billion as imports from Europe rose by 3.2 percent while U.S. exports to the EU rose 1.9 percent. Economists say Europe’s debt crisis and weakened euro could weaken U.S. exports to Europe this year.
The deficit with China rose to $22.3 billion, the largest imbalance since last October and a 15.4 percent increase from April. Through May, the U.S. deficit with China, the largest imbalance with any individual country, is up 10.2 percent from a year ago.
-- Contact Joseph Bonney at jbonney@joc.com.
