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[sludgehound]

US first trade surplus w/ Canada since 1990

Canadian International Merchandise Trade (May) M/M -3.34bln vs. Exp. -2.55bln (Prev. -2.97bln, Rev. -2.99bln)

By Jeffry Bartash , MarketWatch 9:08am ET
Overall deficit rises 2.9% in May to $41.9 billion
WASHINGTON (MarketWatch) -- The U.S. ran a trade surplus with Canada in May for the first time since 1990, the result of a stronger dollar and less demand for foreign petroleum amid an explosion in domestic oil production.
Despite the positive balance with Canada , the largest trading partner of the U.S., the nation's trade deficit rose 2.9% in May, mostly because the U.S. exported fewer aircraft and other manufactured goods.
The trade gap climbed to a seasonally adjusted $41.9 billion from a revised $40.7 billion in April, the government said Tuesday.
The strong dollar allows the U.S. to buy foreign oil at cheaper prices, but it's also hurt exports of American-made goods and services in key markets such as China and Europe whose economies are encountering fresh headwinds.
Exports dropped 0.8% in May to $188.6 billion and they are down 2.7% in the first five months of 2015 compared to the same period a year earlier.
Meanwhile, imports slid 0.1% in May to $230.5 billion . The U.S. imported a record $29.5 billion in autos and parts, reflecting a post-recession surge in sales of cars and trucks.
Yet imports of commercial airplanes, a volatile category that can swing sharply month to month, and other industrial goods fell in May. U.S. energy producers in particular slashed purchases of drilling and other equipment to offset the big drop in oil prices.
In May, the U.S. petroleum "gap" fell to the lowest level since 2002. The gap has been falling for several years as fracking unlocks vast deposits of previously unreachable fossil fuels, reducing the nation's need for foreign oil.
The trade deficit has averaged a smaller $41.3 billion in the first two months of the second quarter, compared to a $43.4 billion average in the first quarter. If the June deficit falls in line, trade is unlikely to be a big drag on U.S. gross domestic product in the second quarter like it was in the first three months of the year, when the economy contracted.
Gross domestic product -- the value of everything an economy produces -- is higher when the trade deficit is lower. A country that produces more goods and services at home than it buys from other countries employs more workers and generates more profits.
- Jeffry Bartash ; 415-439-6400; [e-mail]
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(END) Dow Jones Newswires
07-07-15 0907ET