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Economy in Brief

U.S. Trade Deficit Deepens Slightly Month over Month and Still Is Sharply Deeper Than Last Year
by Tom Moeller July 13, 2010

A stronger U.S. economy continued its effect of deepening the U.S. foreign trade deficit during May. The deficit of $42.3B followed an unrevised April figure of $40.3B. The latest figure was the deepest since December 2008 and exceeded Consensus expectations for a deficit of $39.2B.

A healthier economy was evident in a 6.1% increase in nonoil imports which raised them 29.5% from last May. The monthly gains in nonoil imports have improved significantly since last July when the U.S. economic recovery began. May imports of nonauto consumer goods rose 7.0% (13.8% y/y) while imports of capital goods jumped 5.5% (29.5% y/y). Auto imports also jumped 12.8% and they've nearly doubled since last year. Weakness in oil prices caused oil imports to fall 9.1% but they're still up by more than half since last year. The per barrel cost of crude petroleum was $76.93 and in real terms, oil imports fell 8.4% during May (+6.2% y/y). Imports of services rose 1.9% (9.4% y/y) as travel imports were again firm (12.2% y/y). Passenger fares also were strong (15.3% y/y) as were imports of other private services (10.7% y/y).

A lower value of the U.S. dollar was evident in a 2.4% jump (21.0% y/y) in exports. Capital goods exports were quite strong with a 5.5% increase (21.3% y/y). A 2.6% gain (11.1 y/y) in nonauto consumer goods exports made up most of an April decline while auto exports jumped 1.5% (66.2% y/y) for the third straight month. Services exports also were strong posting a 1.3% increase (9.6% y/y). The lower value of the dollar encouraged visits to the U.S. and travel exports rose 12.2% y/y while passenger fares rose 15.3%. Exports of other private services rose 10.7%.

By country, the trade deficit with mainland China deepened to $22.2B, its deepest since October. Trade with China surged as exports jumped more than one-quarter y/y and imports rose the same amount. The trade deficit with Japan narrowed a second month to $3.6B. Imports rose by 43.2% y/y with U.S. economic recovery and exports rose 21.6% y/y. With the European Union, the trade deficit deepened slightly to $6.2B as exports rose 8.2% y/y but imports jumped 23.1%.

The international trade data can be found in Haver's USECON database. Detailed figures are available in the USINT database.

Foreign Trade  May April March Y/Y 2009 2008 2007
U.S. Trade Deficit $42.3 $40.3B $40.0B $24.8B(5/09) $378.6B $695.9B $701.4B
  Exports - Goods & Services (m/m) 2.4% -0.7% 3.8% 21.0% -14.6% 11.5% 13.2%
  Imports - Goods & Services 2.9 -0.4 2.9 29.1 -23.3 8.0 6.0
    Petroleum -9.1 0.3 6.0 57.3 -44.0 37.0 9.4
    Nonpetroleum 6.1 -0.5 3.2 29.5 -20.9 1.5 4.8
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