U.S. trade deficit widens in May as exports struggle

WASHINGTON (AP) — The U.S. trade deficit widened slightly in May, reflecting declines in sales of American-made aircraft and machinery as exports continued to suffer from a strong dollar.

The deficit increased 2.9 percent to $41.9 billion in May, up from an April imbalance of $40.7 billion, the Commerce Department reported Tuesday.

Imports fell 0.1 percent to $230.5 billion. Exports slid at a faster pace of 0.8 percent to $188.6 billion. American producers have been hurt this year by a rising value of the dollar, which makes U.S. goods less competitive in overseas markets.

Even with the slight rise in May, the deficit over the past two months is averaging less than in the first quarter. That should help boost growth in the second quarter.

Trade slashed nearly 2 percentage points off growth during the first three months of the year. The big drag from trade combined with an unusually severe winter sent the economy into reverse, contracting at an annual rate of 0.2 percent in the January-March period.

Analysts believe that a narrowing of the trade deficit in the April-June period will be a major factor in reviving overall growth. They forecast a rebound to an annual growth rate of around 2.5 percent, as measured by the gross domestic product, in the second quarter.

Analysts think going forward, solid job gains will bolster GDP growth even more in the second half of this year to around 3 percent.