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Economic Report: U.S. trade deficit narrows in May to lowest level of the year

The news: The U.S. international trade deficit narrowed 1.3% in May to $85.5 billion, the Commerce Department said Thursday.

Economists surveyed by The Wall Street Journal had predicted the deficit would widen to a seasonally adjusted $84.9 billion. 

This is the smallest trade deficit since December’s $78.9 billion gap.

The trade deficit has narrowed for two straight months after hitting a record $107.7 billion in March.

Key details: Exports rose 1.2% to a record $255.9 billion in May, the fourth straight monthly gain,

Imports rose 0.6% to $341.4 billion but remained below March’s record high.

Adjusted for inflation, the real goods deficit increased slightly to $116.6 billion in the month.

Big picture: The easing of the trade deficit should be positive for GDP growth. The U.S. consumer has been the buyer of last resort for foreign goods throughout the pandemic. If U.S. consumer demand slows, it will be another headwind for the global economy.

Market reaction: Stocks
DJIA,
+0.23%

SPX,
+0.36%

were set to open higher on Thursday led by the tech sector.

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