The U.S. trade deficit narrowed in May after a sharp increase in April. It narrowed to $69.0 billion in May from $74.4 billion in April, according to the U.S. Census Bureau. The trade deficit in May was in line with consensus expectations. Exports declined 0.8% from the prior month while imports fell 2.3%. The U.S. trade deficit decreased $0.4 billion to $68.0 billion for the three months ending in May. 

Exports of goods fell 1.5% on the month as slowing global demand continues to weigh on U.S. trade. Within the goods segment, exports of food and beverage fell 13.5% in May from April and 20.5% on a year-over-year basis. Exports of services rose 0.5% on the month and 6.6% on a year-over-year basis. 

Imports of goods fell 2.3% in May from April and 9.0% on a year-over-year basis. Imports of industrial supplies were down 5.9% on the month and 21.9% on a year-over-year basis. Imports of services rose 0.5% in May from April and 3.4% from twelve months earlier.

The U.S. trade deficit narrowed in May as the value of imports shrank more than the value of exports. On an inflation-adjusted basis, the trade deficit fell to $89.2 billion in May from $96.2 billion in April. Looking ahead, tighter financial conditions and weaker consumer balance sheets will be drags on imports through 2023. Slowing external demand, particularly from China, will put downward pressures on U.S. exports.

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