WASHINGTON — The U.S. trade deficit surged in May to the highest level in more than 2 1/2 years, driven wider by a big increase in oil imports and a decline in exports.
The Commerce Department said Tuesday that the deficit increased 15.1 percent to $50.2 billion in May. That’s the largest imbalance since October 2008.
Exports declined 0.5 percent to $174.9 billion. Imports rose 2.6 percent to $225.1 billion. Oil prices have fallen since May, so the effect of higher prices should ease some in the coming months.
The deficit is running at an annual rate of $563.2 billion. That’s 12.6 percent higher than the 2010 imbalance. A higher trade deficit subtracts from overall economic growth because it means consumers are purchasing more foreign-made goods and fewer products made by U.S. workers.
Analysts said the wider deficit in May means that the economy probably grew at an even slower pace in the April-June quarter than they had previously forecast. Paul Dales, chief U.S. economist at Capital Economics, said he was now looking for economic growth of around 2 percent in the second quarter. That’s roughly the same pace as the first three months of the year.
“As the supply chain disruptions continue to unwind, we expect imports from Japan over the next few months to recover and for the overall trade deficit to modestly widen later this year before leveling off in 2012,” said Troy Davig, an economist with Barclays Capital.
The deficit with China jumped to $25 billion, the largest monthly gap since November. The deficit with Japan fell 26.4 percent to $2.6 billion. Japanese imports shrank further because of supply-chain disruptions caused by the March earthquake and tsunami.
Economists say Japan is starting to rebound from the crisis and a parts shortage that followed those disasters is beginning to dissipate.
Numbers
$563.2 billion Annual rate of the U.S. trade deficit
12.6% Increase in the current trade deficit compared with 2010
2% Projected second- quarter economic growth by Capital Economics, roughly the same growth as in the first quarter
