U.S. Trade Deficit Narrows As Oil Imports Drop

The U.S. foreign trade deficit during May narrowed sharply to $48.7B from a little-revised $50.6B in April. Expectations were for a deficit of $49.0B. Exports ticked up 0.2% (4.2% y/y) while imports fell 0.7% (-9.8% y/y) with lower oil imports. In chained 2005 dollars, the deficit in goods deepened slightly to $48.0B in May from $49.7B. Real exports rose 1.0% (4.9% y/y) and real imports increased 0.3% (3.6% y/y).

Total imports fell 0.7% (+3.8% y/y) in May as goods imports fell 0.8% (+3.7% y/y). However, the decline was not broad-based amongst categories.The decline in oil prices to an average $107.91 helped lower the value of petroleum imports in May by 8.4% (-9.8% y/y). When adjusted for prices, petroleum imports fell 3.9% (-9.7% y/y).Nonauto consumer goods imports fell 0.9% (+0.9% y/y) while imports of foods, feeds & beverages dropped 0.5% (+1.6% y/y).

Elsewhere, imports of nonpetroleum goods in real terms increased 1.3% (7.2% y/y).Imports of autos & products rose 3.1% (29.1% y/y) while capital goods imports also increased 3.1% (10.6% y/y). Imports of other goods gained 5.2% (13.4% y/y). Finally, imports of services rose 0.2% (6.0% y/y) as travel imports rose 0.2% (9.1% y/y).  

Overall U.S. exports inched up 0.2% (4.2% y/y) as nonpetroleum goods exports increased 0.4% (4.2% y/y). Exports of foods, feeds & beverages rose 8.3% (8.7% y/y) and capital goods exports gained 1.6% (6.4% y/y). "Other" goods exports jumped 5.2% (13.4% y/y). To the downside were nonauto consumer goods exports by 1.2% (+3.8% y/y), auto exports by 0.9% (+12.3% y/y) while lower oil prices led industrial supplies exports down 2.0% (+1.4% y/y). Exports of services rose 0.7% (3.2% y/y). 

By country, the May goods trade deficit with mainland China deteriorated sharply to $26.0B, its deepest since January. Exports to China jumped 13.5% y/y while U.S. imports gained 6.6% y/y. With Japan, the deficit doubled y/y to $6.4B as U.S. exports rose 1.2% y/y but U.S. imports also nearly doubled. The deficit with the European Union deepened y/y to $10.5B with a slim 0.8% y/y gain in exports to Europe and a 5.5% y/y rise in imports.

The international trade data can be found in Haver's USECON database. Detailed figures are available in the USINT database. The expectations figures are from the Action Economics consensus survey, which is carried in the AS1REPNA.

The Global Economy and the European Sovereign Debt Crisis from the Federal Reserve Bank of St. Louis can be found here.