By msnbc.com staff and news wires
The U.S. trade deficit shrank in May, as exports to places like China and Europe rose, defying concerns about a global economic slowdown.
The Commerce Department said Wednesday that the trade deficit fell 3.8 percent to $48.7 billion in May, down from $50.6 billion in April.
Exports rose 0.2 percent to $183.1 billion. The increase reflected stronger sales of telecommunications equipment and heavy machinery. Imports dropped 0.7 percent to $231.8 billion. America's foreign oil bill fell to the lowest level in 15 months.
A narrower trade gap is less of a drag on growth. The United States is spending less on foreign-made products, while taking in more revenues from sales of U.S.-made goods.
American companies slammed the brakes on hiring in the second quarter, a warning sign the recovery from the 2007-2009 recession is faltering.
Many economists think economic growth slowed in the second quarter, with companies holding back due to fears of Europe's debt crisis as well as U.S. government plans for severe belt tightening in 2013.
Exports have been a key support for the economy since the recession.
"At least as of May the situation in Europe wasn't leading to some kind of collapse in trade," said David Resler, an economist at Nomura Securities in New York.
Exports climbed 0.2 percent, rising across categories from capital goods and industrial supplies to consumer goods. Imports fell 0.7 percent.
Still, Europe's problems and signs of cooling growth in China suggest demand from abroad might weaken.
"While the positive momentum in export activity provides some encouragement on the tone of overall global economic activity, it is unlikely to be sustained in the coming months," said Millan Mullraine, an economic strategist at TD Securities in New York.
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Earlier this month, a private survey showed activity at U.S. factories declining in June, with new orders falling, including those for exports.
The overall reading for the trade deficit was in line with expectations so it probably won't change analysts' views of second quarter growth.
The data did not appear to affect trading on Wall Street. Futures for U.S. stocks held on to gains, while yields on U.S. 10-year government debt hovered near 5-1/2 week lows.
European crisis
U.S. exports to the 27-nation European Union, in the grip of a continuing debt crisis that has slowed growth around the world, rose 2.6 percent in May to $22.9 billion.
The EU collectively was the United States' second largest export market last year, and exports in the first five months of 2012 were 3 percent above the same period in 2011.
Europe's crisis continues to fester, and on Wednesday Spanish Prime Minister Mariano Rajoy announced a swathe of new taxes and spending cuts to meet tough targets agreed with Europe.
U.S. exports to China rose 5.2 percent in May. China has been one of the fastest growing markets for U.S. goods, and exports to that country were up 6 percent for the first five months of 2012 from the year-ago period.
Imports from China have been increasing at an even faster pace than exports, and in May America's trade deficit with China widened to $26 billion from $24.6 billion a month earlier.
A fall in the price of oil helped drive the overall reduction in U.S. imports. The average price of imported oil slipped to $107.91 per barrel.
Even though exports to Europe rose, the flow of imports grew even more, pushing the trade deficit with the European Union to $10.5 billion, the highest since July 2008.
Reuters and The Associated Press contributed to this report.
CNBC's Rick Santelli breaks down the latest numbers on international trade.
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