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Economy in Brief

U.S. Trade Deficit Narrows to $85.55 Billion in May, the Smallest since December
by Winnie Tapasanun  July 7, 2022

• Exports post the weakest increase in four months while imports rise for the ninth time in 10 months.

• Goods exports up; good imports virtually unchanged.

• Petroleum imports post the smallest gain in four months; nonpetroleum imports fall for the third time in four months.

• Real goods trade deficit rises to $116.55 billion.

• Goods trade deficit w/ China narrows to a six-month low while deficits w/ Japan and EU widen.

The U.S. trade deficit in goods and services (BOP basis) fell to $85.55 in May from a revised $86.69 billion in April (originally $87.08 billion) and a record $107.65 billion in March, according to the U.S. Census Bureau. The May deficit, while the smallest since December, was well above the $66.63 billion in May 2021. A $84.7 billion deficit had been expected in the Action Economics Forecast Survey. Exports grew 1.2% m/m (21.7% y/y), the weakest of four consecutive monthly increases, after a 3.6% gain (+3.5% originally). Imports rose 0.6% (23.3% y/y), the ninth m/m rise in 10 months, after a 3.5% decline (-3.4% originally).

The trade deficit in goods (customs value) narrowed to $104.04 billion in May, the smallest since December, from $106.81 billion in April. It compared to a $104.31 billion deficit in the advance report released on June 28. Exports of goods rose 1.5% (22.3% y/y), the smallest of four successive m/m gains, after a 3.5% increase, led by rises of 4.8% (39.2% y/y) in industrial supplies, 3.4% (16.7% y/y) in other goods, 3.0% (20.0% y/y) in nonauto consumer goods, and 2.7% (16.2% y/y) in autos but partially offset by drops of 9.1% (+14.6% y/y) in foods, feeds & beverages and 0.6% (+7.9% y/y) in capital goods. Imports of goods were virtually unchanged (+21.4% y/y) in May following a 4.4% April decline and eight straight m/m increases. Imports of goods for other goods (-4.0%; +3.0% y/y), nonauto consumer goods (-2.0%; +18.3% y/y), foods, feeds & beverages (-0.8%; +19.2% y/y), and capital goods (-0.3%; +14.8% y/y) posted their monthly declines, but imports of goods for industrial supplies (2.6%; 39.6% y/y) and autos (1.2%; 17.1% y/y) increased.

Petroleum imports rose 7.2% (63.2% y/y) in May, the smallest of four straight monthly rises, after a 2.7% increase in April. Nonpetroleum imports, however, fell 0.7% (+18.2% y/y), the third m/m fall in four months, after a 5.1% decrease.

The real (inflation-adjusted) goods trade deficit widened to $116.55 billion (chained 2012 dollars) in May from $116.37 billion in April. Real exports of goods slid 1.3% (+5.4% y/y), the first m/m slide since February, after a 3.0% increase. Real imports of goods fell 0.7% (+9.8% y/y), the third m/m fall in four months, on top of a 5.1% drop. The deficit subtracted 3.2%-pt. from Q1 2022 GDP growth; it will likely continue to subtract from Q2 2022 GDP growth.

The surplus on services trade declined to $19.41 billion in May from $21.13 billion in April. The surplus remained significantly below a record-high $26.87 billion in January 2018. Services exports ticked up 0.1% (18.4% y/y), the weakest of four successive m/m increases, after a 3.7% rise. Services imports advanced 3.2% (32.0% y/y), the 14th m/m rise in 15 months, on top of a 1.4% increase.

The goods trade deficit with China narrowed to a seasonally adjusted $32.15 billion in May, the smallest since November, from $34.93 billion in April. Exports rebounded 4.2% (-4.5% y/y) while imports fell 4.8% (+13.6% y/y). The trade deficit with Japan rose to $5.87 billion from $5.61 billion as exports gained 12.2% (9.1% y/y) and imports rose 8.6% (7.9% y/y). The goods trade deficit with the European Union widened to $17.11 billion in May, the largest since January, from $16.98 billion in April with exports up 4.9% (37.4% y/y) and imports up 3.4% (19.8% y/y).

The international trade data, including relevant data on oil prices, can be found in Haver's USECON database. Detailed figures on international trade are available in the USINT database. The expectations figures are from the Action Economics Forecast Survey in AS1REPNA.

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