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The US trade deficit narrowed in April on a drop in imports, which surged in March following the end of a West Coast ports labor dispute, while companies picked up their hiring in May after a pullback the previous month.
The data supported the notion the US economy has recovered somewhat from a first-quarter contraction and bolstered expectations the Federal Reserve may consider raising interest rates later this year.
Not all the news on Wednesday was as encouraging.
Two private reports signalled slower growth in the US services sector, which has propped up the economy as it faced drags from a strong dollar, a recent rise in oil costs and sluggish demand abroad.
US stock indexes rose after the data. The dollar and prices of US Treasuries fell, which traders said was due more to the selling of German Bunds and gains in the euro after the European Central Bank upgraded its inflation outlook.
The US Commerce Department on Wednesday said the trade gap narrowed to $40.9 billion from March's revised deficit of $50.6 billion. The 19.2 per cent drop in the April trade deficit was the largest decrease since early 2009, and the deficit was about $3 billion less than forecast.
Imports fell 3.3 per cent to $230.8 billion as West Coast ports, a key gateway for goods to and from Asia, cleared a backlog created by a labor dispute that was settled earlier this year.
Exports increased 1.0 per cent to $189.9 billion in April with foreign sales of US services edging up to a record high of $60.9 billion.
The April petroleum deficit stood at $6.8 billion, the lowest since March 2002. The latest trade data led Morgan Stanley to raise its forecast of US economic growth in the second quarter to 2.7 per cent from 2.2 per cent.
Meanwhile, private employers added 201,000 jobs in May, the most since January, payrolls processor ADP said on Wednesday. Financial firm Markit said its final May reading of its PMI for the services industry slipped to 56.2, its lowest since January.
That was in line with analyst forecasts and higher than a revised 165,000 jobs in April, which were the fewest since January 2014.
The ADP data came ahead of the U.S. Labor Department's more comprehensive non-farm payrolls report on Friday, which includes both public and private-sector employment.
Economists polled by Reuters are looking for total US employment to have grown by 225,000 jobs in May, largely in line with April's 223,000 increase. The unemployment rate is seen holding at a near seven-year low of 5.4 percent.
Flying in the face of the better trade and jobs outlook, other data showed services industries booked fewer new orders last month.
The Institute for Supply Management's own services sector gauge fell to 55.7 last month, its weakest since April 2014.
