WASHINGTON, July 8 -- The monthly U.S. trade deficit widened to $45 billion in May, as imports rose to their second-highest level on record. The increase in demand for foreign goods and services was another sign of growing momentum in the country’s economic recovery.
The gap in May grew by a hefty 12.1 percent compared to the $40.1 billion deficit recorded in April. It also exceeded the $40.1 billion deficit forecasted by economists surveyed by Bloomberg before Wednesday’s announcement.
May’s wider deficit was mainly due to burgeoning U.S. imports of goods and services.
Total imports increased to $232.1 billion in May from $227.7 billion in April. That stronger volume, second only to the record $234.3 billion of imports recorded in March 2012, was largely due to a $4 billion-dollar jump in the country’s consumption of foreign goods -- a sign that American consumers are opening their wallets.
Consumer goods, industrial supplies and materials, and automotive vehicles and parts accounted for the strongest areas of growth in imports, according to the Bureau of Economic Analysis. .
This growth in demand for foreign goods came amid strengthening confidence among U.S. households and firms. The Thompson Reuters/University of Michigan Consumer Sentiment Index revealed that consumer confidence swelled during recent months and was at a six-year high in May, as jobs and income data brightened.
On the flipside, U.S. exports of goods and services shrunk slightly to $187.1 billion in May from $187.6 billion in April. Dropoffs in exports of consumer goods and industrial supplies were the main cause of this decrease.
Offshore demand for U.S. products was likely suppressed by persistent economic dampness in Europe
and slowing growth in China. On top of that, the country’s exports also became less competitive in the international marketplace as the U.S. dollar picked up strength.
The trade balance for June will be released Aug. 6. It is likely to be another strong month for imports as confidence among U.S. households and firms gained more ground last month.
In the meantime, take a look at the slideshow below to discover what items (as seen around Washington D.C.) made the list of the country’s top 10 imports for the year to date.
Source: Isabella Zhong/MNS