Trade deficit in the U.S. widened markedly for the second straight month in May on a further collapse in exports. The deterioration had a negative tone, as both exports and imports dropped in both April and May, with the falls in exports surpassing those in imports.
Exports contracted 5.8 percent in May, surpassing the fall of 1.2 percent in imports by a wide margin. In April, the falls in exports and imports totalled 25.1 percent and 13.6 percent, respectively. The fall in exports was widely based in May, with five of the six major categories of goods falling. Exports of consumer goods rose, but the change occurred from a low level and the value of foreign shipments continued to be far below totals in earlier months. The other five categories were all weak.
Meanwhile, on the import side, capital goods and autos mainly contributed to the decline, but other areas also were soft. The results for April and May left the deficit thus far in second quarter significantly wider than the average in first quarter, setting the stage for a marked negative contribution to GDP growth in the second quarter, said Daiwa Capital Markets in a report.
“The figures in today’s report were not adjusted for inflation and they did not include trade in services, and thus they do not provide keen insights into the magnitude of the drag from net exports, but the figures lead us to expect a negative contribution in the neighbourhood of two percentage points”, added Daiwa Capital Markets.