The U.S. trade deficit shrank by 1.3 percent in May after a significant drop in the previous month, hitting the lowest level of the year, the Commerce Department reported on Thursday.
In the previous month, trade deficit narrowed by a revised 19.5 percent after hitting an all-time high in March, the report showed.
In May, the goods and services deficit fell slightly by 1.1 billion U.S. dollars to reach 85.5 billion dollars.
U.S. imports ticked up by 0.6 percent to 341.4 billion dollars in May, after the first drop in over half a year. Exports, meanwhile, grew by 1.2 percent to 255.9 billion dollars, the report showed.
"The U.S. trade gap narrowed to the smallest deficit in six months as export growth outpaced imports for the second consecutive month," Tim Quinlan and Shannon Seery, economists at Wells Fargo Securities, said in an analysis.
"The tide is turning on domestic demand, which should continue to quell import growth from the breakneck pace we saw throughout the pandemic," they noted.
Federal Reserver officials acknowledged that the Fed's monetary policy tightening would likely slow down economic growth and push up unemployment, according to the minutes of the Fed's latest policy meeting released Wednesday.
The Atlanta Federal Reserve's GDPNow model updated Thursday showed that the U.S. gross domestic product is estimated to contract at a seasonally adjusted annual rate of 1.9 percent in the second quarter.
With a first-quarter contraction, a second consecutive quarter of negative growth would meet the definition of a recession.
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