US trade deficit continues to narrow in May amid cooling demand

The US trade deficit shrank by 1.3 per cent in May after a significant drop in the previous month, hitting the lowest level of the year, the Commerce Department reported on Thursday.

In the previous month, the trade deficit narrowed by a revised 19.5 per cent after hitting an all-time high in March, the report showed.

In May, the goods and services deficit fell slightly by 1.1 billion US dollars to reach 85.5 billion dollars.

US imports ticked up by 0.6 per cent to 341.4 billion dollars in May, after the first drop in over half a year. Exports, meanwhile, grew by 1.2 per cent to 255.9 billion dollars, the report showed.

"The US trade gap narrowed to the smallest deficit in six months as export growth outpaced imports for the second consecutive month," Tim Quinlan and Shannon Seery, economists at Wells Fargo Securities, said in an analysis.

"The tide is turning on domestic demand, which should continue to quell import growth from the breakneck pace we saw throughout the pandemic," they noted.

Federal Reserve officials acknowledged that the Fed's monetary policy tightening would likely slow down economic growth and push up unemployment, according to the minutes of the Fed's latest policy meeting released Wednesday.

The Atlanta Federal Reserve's GDP Now model updated Thursday showed that the US gross domestic product is estimated to contract at a seasonally adjusted annual rate of 1.9 per cent in the second quarter.

With a first-quarter contraction, a second consecutive quarter of negative growth would meet the definition of a recession. (ANI/Xinhua)

( With inputs from ANI )