Wider US Trade Deficit for May

The goods and services deficit was $41.9 billion in May, up by $1.2 billion from the revised $40.7 billion deficit in April (previously reported as -$40.9 billion). Bloomberg had the consensus estimate at -$42.7 billion.

May exports were $188.6 billion, which was $1.5 billion less than the reported April exports. Imports were down by $0.3 billion to $230.5 billion. Another factor noted was that May’s increase reflected a gain in the goods deficit of $1.2 billion to $61.5 billion. It also reflected an increase in the services surplus, but of less than $0.1 billion to $19.6 billion.

The petroleum gap narrowed $1.0 billion to $5.8 billion. That figure reflected rising domestic oil output and included greater exports of refined products.

Exports have been under pressure due to the U.S. dollar strength, but imports were also lower. Imports of autos were up by $0.9 billion in May. While the United States had a surplus in trade with Canada, wider gaps were seen with China ($30.5 billion) and Mexico ($4.6 billion). Narrower gaps were seen with the European Union ($12.5 billion) and Japan ($5.2 billion) in May.

While this is a monthly negative, the report is not so far off estimates that it would likely impact gross domestic product (GDP) expectations for the second quarter. The long and short of the matter is that this is just one more report marked by U.S. dollar strength hurting business. It also excludes the latest child’s play in Greece.

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