Trade deficit down 1.2% as exports rise to record high

WASHINGTON -- The United States' trade deficit narrowed in May as exports — including industrial supplies and consumer goods — climbed to all-time highs.

The latest snapshot of trade activity, reported by the Commerce Department on Friday, showed that the nation's trade gap decreased to $59.8 billion. That was down 1.2% from April's trade deficit and was the best showing since March.

Exports of U.S.-made goods and services totaled an all-time high of $157.6 billion in May. That marked a 0.9% increase from April. The declining value of the U.S. dollar, relative to other currencies, especially the euro, is helping to make U.S. exports cheaper and thus more attractive to foreign buyers. Growth in exports has been one of the few bright spots for the U.S. economy, which has been pounded by housing, credit and financial crises.

Imports of goods and services grew to a record of $217.3 billion in May, a 0.3% increase from the prior month.

The trade picture turned out better than many economists were anticipating. They were forecasting the trade gap to widen to $62.2 billion in May. The improvement should help give a boost to overall economic growth during the April-to-June quarter.

Still, high energy prices are a strain on U.S. companies and on the economy as a whole.

The average price of imported crude oil soared to a record of $106.28 a barrel in May. That pushed the country's imported crude-oil bill to an all-time high of $31.2 billion. The quantity of imported crude oil actually dipped in May from April.

The trade deficit with oil-producing nations, including Saudi Arabia, Indonesia, Nigeria and Venezuela, rose to a record of $17.9 billion in May.

The United States' has struggled to trim its trade deficits, a source of tension between Democrats and Republicans.

The Bush administration says free-trade policies that make it easier for U.S. companies to do business in other countries are the best way to deal with the country's trade deficits.

Democrats, however, blame the president's trade policies for the trade gap and loss of millions of U.S. factory jobs over the years as U.S. companies moved production to low-wage places such as China.