WASHINGTON: The U.S. trade deficit jumped to a five-month high in May as imports of goods increased, likely as businesses restocked ahead of an increase in tariffs on Chinese merchandise, overshadowing a broad rise in exports.
The goods trade deficit with China, a focus of President Donald Trump's"America First" agenda, increased 12.2per cent to US$30.2 billion, with imports rising 12.8per cent. Trump imposed additional import tariffs on Chinese goods, after a breakdown in negotiations, prompting Beijing to retaliate.Trump and Chinese President Xi Jinping last week agreed to a trade truce and a return to talks.
In May, goods imports increased 4.0per cent to US$217.0 billion. Apart from drawing more imports from China, imports from the European Union, Mexico and Canada increased to record highs in May. Imports of consumer goods rose US$1.4 billion, while those of motor vehicle and parts soared US$2.3 billion to an all-time high.There were also big increases in imports of capital goods and industrial supplies and materials.
Trade contributed 0.94 percentage point to the economy's 3.1per cent annualized growth pace in the first quarter. The Atlanta Fed is forecasting gross domestic product rising at a 1.5per cent rate in the April-June quarter. Economists polled by Reuters are looking for nonfarm employment to have increased by 160,000 jobs after rising by only 75,000 in May. Job growth has slowed to an average of 164,000 per month this year from 223,000 in 2018 as workers become scarce and the economy slows.
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