- The U.S. goods trade deficit narrowed in May after surging in April.
- Easing supply chains should support automotive exports in the near term.
- Trade will likely be negative for GDP growth in the current quarter.
The advance nominal-goods trade deficit was $91.1 billion in May, down $6.0 billion from $97.1 billion (revised from $96.8 billion) in April, according to data from the U.S. Census Bureau. This is better than the consensus expectation for a narrowing to $93.7 billion. After increasing by almost 20% in April, the trade deficit narrowed by 6.1% in May. Exports fell 0.6% in May from the prior month while imports fell 2.7%.
Industrial supplies exports fell 3.0% on the month as China’s faltering economy and the eurozone’s manufacturing recession continue to weigh on global trade. Industrial supplies exports were down 21.8% in May from twelve months earlier. Automotive exports rose 8.7% in May from April and were up 16.3% on a year-over-year basis. The headwinds in the vehicle industry from labor shortages and supply-chain issues are improving, supporting automotive exports.
Industrial supplies imports fell 5.9% in May from a month ago and were down 22.1% from a year ago. Imports of consumer goods were down 7.3% in May and down 16.6% from a year ago. Total U.S. goods imports were down 8.8% in May from a year ago.
The goods trade deficit reversed some of April’s expansion in May as the value of imports shrunk more than exports. Even with the narrowing in May, the goods trade deficit is up by over 10% since March, and trade will likely be a drag on economic growth in the second quarter. Looking ahead, a shrinking trade deficit will likely add to U.S. economic growth this year as higher interest rates weigh on U.S. imports and a stalling global economy weigh on U.S. exports.
The PNC Financial Services Group, Inc. is one of the largest diversified financial services institutions in the United States, organized around its customers and communities for strong relationships and local delivery of retail and business banking including a full range of lending products; specialized services for corporations and government entities, including corporate banking, real estate finance, and asset-based lending; wealth management and asset management. For information about PNC, visit www.pnc.com.
