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Economy in Brief

U.S. International Trade Deficit Unexpectedly Widened in May
by Sandy Batten  June 25, 2020

• Trade deficit widened to $74.3 billion.

• A 5.8% drop in exports more than offsets the 1.2% decline in imports.

• Imports of industrial supplies and of consumer goods ex autos rose in May.

The advance U.S. trade report showed the goods trade deficit unexpectedly widened to $74.3 billion in May from $70.7 billion in April. The Action Economics Forecast panel had looked for the deficit to narrow to $67.2 billion. The marked widening of the deficit in both April and May points to net exports subtracting 2-3 percentage points from Q2 GDP, which is expected to post the largest quarterly decline in the history of the national accounts (dating back to 1947). Exports fell 5.8% m/m (-36.3% y/y) on top of a 25.1% m/m plunge in April. Imports fell only 1.2% m/m (-26.1% y/y) in May after a 13.6% m/m drop in April. Since February, exports have fallen 34.6% while imports have declined 16.4%.

Exports declined in each major category in May except for consumer goods excluding autos, which rose 6.0% m/m. Automotive vehicle and parts exports fell another 11.1% m/m in May on top of the 65.8% m/m collapse in April. Exports of capital goods declined 2.5% m/m in May following a sharp 23.8% m/m drop in April.

This was the fifth consecutive monthly decline in imports. However, the May decline was more than accounted for by a record 72.6% m/m plunge in imports of automotive vehicles and parts. Excluding this category, the remainder of imports actually rose 1.6% m/m in May with imports of industrial supplies rising 4.7% m/m and imports of consumer goods ex autos increasing 4.1% m/m.

The advance international trade data can be found in Haver's USECON database. The expectation figure is from the Action Economics Forecast Survey, which is in AS1REPNA.

Advance U.S. Foreign Trade in Goods (Customs Value $) May Apr Mar May Y/Y 2019 2018 2017
U.S. Trade Deficit ($ bil.) -74.34 -70.73 -64.94 -74.95
-854.37 -872.04 -793.40
Exports (% Chg) -5.8 -25.1 -7.4 -36.3 -1.4 7.7 6.6
Imports (% Chg) -1.2 -13.6 -2.1 -26.1 -1.6 8.5 7.0

Note: Current month is based on Advance Trade data; Previous months reflect revised data from International Trade release.

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