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Wednesday, July 12, 2006

U.S. Trade Deficit Leveling Off?

By Yaser Anwar, CSC of Equity Investment Ideas

The Commerce Department has announced that as both U.S. exports and imports set monthly records in May, the trade deficit grew by 0.8% during that month, leveling off at $63.8 billion.

According to Bloomberg News, the smaller-than-expected growth in the deficit came as "American companies shipped more goods overseas and demand waned for foreign-made electronics, clothing and cars."

"The $63.8 billion gap in goods and services trade widened from April’s $63.3 billion, the Commerce Department said in Washington. Exports rose by the most since April 2005, while an increase in imports reflected more crude oil shipments. The shortfall with China widened."

In fact, exports jumped some 2.4% to $118.7 billion - the largest percentage gain since the end of 2004. And both record prices and quantities led to record petroleum imports, which were up 1.8% to $182.5 billion.

According to a MarketWatch analysis of a government report: "In the first five months of the year, imports are up 12.3% compared with the first five months of 2005. Exports are up 12.0% year-to-date. The year-to-date deficit is up 12.8% to $317.9 billion. Last year, the deficit totaled a record $716.7 billion."

Source: Money news

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