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International Trade: Imports Increase, Deficit Widens

July 6, 2016
Bottom Line: The trade deficit widened moderately in May, more than expectations as imports increased modestly while exports declined slightly. On a trend basis, the trade deficit has been widening since 2013. The April/May average for real trade balance for goods is modestly below its Q1 levels, suggesting a positive contribution to the Q2 GDP.

The International Trade Deficit WIDENED by $3.8 billion to $41.1 billion in May, compared with market expectations for an increase to a $40.0 billion deficit. For the first 5 months of the year, the trade deficit has averaged $40.1 billion, modestly below from the average of $41.5 billion for the same period in 2015.

Exports FELL by 0.2% to $182.4 billion after an increase of 1.4% in the prior month. The declines in capital goods, motor vehicles and parts and consumer goods were partially offset by increases in food, feed, and beverages, other goods and industrial supplies and materials. Export growth is now 4.2% BELOW their year ago level, and has been declining for the past year because of weakening growth in global economic activity.

Imports ROSE by 1.6% to $223.5 billion after an increase of 2.0% in the prior month. The increases in industrial supplies and materials, consumer goods, motor vehicles and parts, other goods, food, feed, and beverages were partially offset by the declines in capital goods. In May, oil imports increased because of modest gains in both oil prices and the volume of oil imports. Oil imports 2016 year-to-date levels are still moderately below the 2015 year-to-date levels. Despite this month’s increases, imports are still 3.1% BELOW their year ago level. The import growth has also been declining over the past year.
Article by contingentmacro