Exports declined in May, sending trade deficit up


NEW YORK -- A decline in exports caused the U.S. merchandise trade deficit to widen slightly in May, to a seasonally adjusted $4.574 billion, the Commerce Department said yesterday.

Exports fell 0.9 percent, to $35.304 billion from $35.632 billion, and imports fell 0.4 percent, to $39.878 billion from April's $40.139 billion.

The April deficit was revised to $4.507 billion from the $4.779 billion reported originally.

Though May's deficit was much narrower than the $4.9 billion forecast, it is likely to continue to grow as imports rise amid increased consumer demand as the economy pulls out of recession, economists said.

"The drop in imports has come as demand has gone through the floor," said David Wyss, an economist at Data Resources. "But later this year we expect imports to begin rising sharply."

"We're holding gains in trade that have appeared throughout the year," said economist Allen Sinai of The Boston Co., "but it's probably the best we can do in a recovering economy."

Economist Brian Fabbri at Midland Montagu said, "A small trade deficit implies we're not importing very much, which implies that we're not spending very much."

Consequently, as the economy pulls out of recession, imports should rise, causing the deficit to widen further, he said.

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