The U.S. trade deficit narrowed a bit more than expected in May as exports jumped to a record high, suggesting trade could be less of a drag on second quarter growth than earlier feared.
The Commerce Department said on Thursday the trade gap fell 5.6 percent to $44.4 billion. April's trade deficit was revised slightly down to $47.0 billion.
Economists polled by Reuters had expected the deficit to narrow to $45.0 billion in May from a previously reported $47.2 billion shortfall.
When adjusted for inflation, the deficit narrowed to $51.96 billion from $53.88 billion in April.
Trade subtracted 1.5 percentage points from first-quarter gross domestic product. The economy contracted at a 2.9 percent annual pace in the first three months of the year.
In May, exports increased 1.0 percent to a record high of $195.5 billion. Exports were driven by a surge in automobiles, parts and engines, which rose to a record high. Exports of consumer goods were also the highest on record.
Imports fell 0.3 percent to $239.8 billion as petroleum imports tumbled to their lowest level since November 2010. Non-petroleum imports, however, hit a record high in May.
That points to an acceleration in domestic demand, which cannot be satisfied with locally produced goods, and is consistent with expectations of a rebound in growth in the second quarter.
The politically sensitive trade gap with China rose to $28.8 billion from $27.3 billion in April.