Trade Gap Unexpectedly Narrows By 1.2% To $59.79B

July 11, 2008 2:22 p.m. EST

Washington, D.C. (AHN) - U.S. May trade deficit narrowed more than expected led by the weakening dollar, reduction in the demand for imported goods including oil and increased exports of goods and services.

According to the Commerce Department report released on Friday, the U.S. deficit contracted by 1.2 percent $59.79 billion compared to April's revised $60.50 billion.

The market analysts, before the report on the May U.S. trade gap was released, expected it to narrow to $62.2 billion from $60.9 billion in April.

The report attributed the narrowing gap to the U.S. exports in May that increased to an all-time high of $157.5 billion, up by 0.9 percent, compared to $156.16 billion in April, led by weak dollar.

Imports in the month of May increased by a smaller amount by 0.3 percent to $217.3 billion, compared to 216.7 billion registered the prior month.

The value of crude oil imports in May gained by 6.5 percent to $31.25 billion, up from $29.34 billion in April.

Crude's average price per barrel increased by a record $9.47 to an all-time high of $106.28, compared to $96.81 in April.

But the volume of crude oil imported declined by 6.1 percent to 9.5 million barrels a day or 294.00 million barrels in total, down from 303.05 million in April, as prices climbed up with the slowdown in the demand. It was

The deficit with China expanded to $21.05 billion in May, compared to $20.24 billion in April.

While the trade gap narrowed with Canada to $5.44 billion, Mexico to $6.58 billion, Japan to $5.05 billion and the European Union to $6.50 billion.

In a separate report, import prices jumped 2.6 percent on a monthly basis in June, according to the Labor Department on Friday, matching May's revised increase.

The report showed prices of imported goods climbed by 20.5 percent from a year before.