The U.S. Bureau of Economic Analysis reported Wednesday that the trade deficit increased 12.1 percent from $40.3 billion in April to $45 billion in May. Total May exports declined $0.5 billion to $187.1 billion, while total imports increased $4.4 billion to $232.1 billion. Economists were expecting a more mild increase in the total deficit — to $40.8 billion — but a sharp increase in non-petroleum goods deficit threw off forecasts.
On the year, the goods and services deficit is down $1.2 billion. Total exports are up $2.8 billion, or 1.5 percent, over the past 52 weeks, while imports are up $1.6 billion, or 0.7 percent. Broadly speaking, a steady decline in petroleum imports — down 15 percent year-to-date — have helped put downward pressure on the U.S. deficit.
Goods: The goods deficit increased $5 billion between April and May. Exports of goods decreased $0.9 billion to $130.3 billion, while imports increased $4.2 billion to $193.7 billion. This reflects a $1.2-billion decrease in exports of consumer goods and a $0.9-billion decrease in exports of industrial supplies. Capital goods exports increased $0.8 billion.
Services: The services surplus increased $0.2 billion between April and May. Exports of services increased $0.5 billion to $56.8 billion, while imports increased $0.2 billion to $38.4 billion.
The unexpectedly large deficit recorded for May means that estimates for second-quarter GDP growth could be revised downward. While rising imports are something of an indicator of business activity in the U.S., much of that spending isn’t staying within the U.S. Slowing exports means two things: less demand overseas and fewer dollars coming home from overseas sales.
The total value of imports for May — $232.1 billion — is the second highest on record. However, the annual deficit is still running 6.3 percent lower than last year’s total at $501.2 billion.
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