Goods trade deficit decreases 6.1 to 91.1 billion in May
Wholesale inventories dip 0.1; retail stocks rise 0.8

WASHINGTON, June 28 Reuters The U.S. trade deficit in goods narrowed in May as imports fell, but the improvement was probably insufficient to prevent trade from being a drag on economic growth in the second quarter.

The hit from trade on gross domestic product was, however, likely to be offset by a rise in inventory investment, with the report from the Commerce Department on Wednesday also showing retail inventories increasing strongly last month.

A raft of upbeat data this month, including nonfarm payrolls, retail sales, durable goods orders and housing starts, have suggested that the economy remained on a steady growth path in the second quarter, defying growing fears of a recession.

The goods trade deficit decreased 6.1 to 91.1 billion last month, leaving the bulk of April39;s surge intact.

Even with the narrowing in May, the goods trade deficit is up by over 10 since March, and trade will likely be a drag on economic growth in the second quarter, said Abbey Omodunbi, a senior economist at PNC Financial in Pittsburgh, Pennsylvania.

Imports dropped 2.7 to 254.0 billion. While the decline in imports helped shrink the deficit, it suggested that domestic demand was softening. The drop was led by a 7.3 plunge in consumer goods imports. Industrial supplies imports, which include crude oil, fell 5.9. Food imports slipped 3.0.

But capital goods imports rose…