10 July 2009

As [US] Imports Slow, Trade Deficit Narrows

The following is excerpted from today's edition of "New York Times".

The United States trade deficit fell to the lowest level in more than nine years in May as exports posted a small gain while the weak American economy pushed imports down for a 10th consecutive month.

The Commerce Department said the deficit narrowed to $26 billion, a drop of 9.8 percent from April and the lowest level since November 1999. Economists expected the deficit to widen to $30.2 billion in May.

So far this year, the deficit is running at an annual rate of $350 billion, about half of the $695.9 billion deficit for all of 2008. Economists believe that trend will continue as weakness in the United States depresses demand for imported goods.

The big improvement reflects the prolonged recession, which has sharply reduced American demand for imported goods. American exports also are down from last year’s peaks, hurting manufacturers, but those declines have been smaller than the plunge in imports.

...America’s deficit with Canada, its largest trading partner, dropped to $628 million, the smallest monthly imbalance in 15 years. The deficit with Japan shrank to $1.9 billion, the lowest deficit with that country in more than two decades.

Exports of goods and services rose 1.6 percent to $123.3 billion in May, reflecting increased sales of soybeans, corn and other farm products, along with higher exports of industrial machinery, generators and computers. But even with the May increase, exports are 25 percent below the record high set in July 2008.

Imports edged down 0.6 percent to $123.3 billion, the 10th consecutive monthly decline. Imports are 34.9 percent below the all-time high set last July....