The U.S. trade deficit widened in May, fueled by a drop in exports that could heighten concerns over weak overseas demand and a strong U.S. dollar.
The increase in the trade gap to $41.9 billion, announced on Tuesday by the Commerce Department, was less than analysts had expected. That suggests Wall Street economists, who expected a $42.6 billion deficit, might raise slightly their forecasts for economic growth in the second quarter.
But the drop in exports in May highlights a change in America's recovery from recession in which the economy has relied more on domestic drivers like construction and services, rather than export-led industries such as manufacturing.
Led by a drop in overseas sales of U.S.-made capital goods, exports fell $1.5 billion in May, or 0.8 percent, to $188.6 billion. Imports fell by about $300 million, or 0.1 percent, to $230.5 billion.