• 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.

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