WASHINGTON – The U.S. trade deficit widened in May as $71.2 billion as a small increase in exports was offset by a bigger rise in imports.
The Commerce Department reported Friday that the deficit rose 3.1% from the revised April deficit of $69.1 billion The U.S. trade deficit had hit a monthly record of $75 billion in March.
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In May, exports of U.S. goods and services rose 0.6% to $206 billion. But that was offset by a 1.3% gain in imports which hit $277.3 billion.
Through the first five months of this year, the U.S. trade deficit totals $353.1 billion, up a sizable 45.8% from the deficit during the same period last year when Americans' appetite for imported goods was being held back by the pandemic.
This year, the improving U.S. economy has increased demand for imports while the rest of the world has been recovering more slowly, dampening demand for U.S. exports. The trade deficit is the gap between what America sells abroad and what the country imports.
The deficit in goods totaled $89.2 billion in May and this was offset by a smaller $17.9 billion surplus in services such as airline travel. Since the pandemic, the U.S. services surplus has been shrinking given the pandemic's impact on travel while the goods deficit has been rising as American consumption patterns were altered in favor of more goods purchases.
But analysts think that trend will revert back to more normal patterns in coming months as the impacts of the pandemic lessen.
“As pandemic distortions dissipate and global economies restart more completely, imports and exports will likely rebalance with support from services,” said Rubeela Farooqi, chief U.S. economist at High Frequency Economics.