Today the BEA reported the US trade deficit was $-46.5 billion. The Econoday economists’ consensus estimate of $-46.2 billion for international trade was nearly on the mark, but the advance reading on goods pointed the way.
The nation’s trade gap came in very near expectations in May, at $46.5 billion vs Econoday’s consensus for $46.2 billion and under April’s $47.6 billion. Exports rose a constructive 0.4 percent in the month to $192.0 billion while, in another positive for the deficit, imports edged 0.1 percent lower to $238.5 billion.
The strength in exports is centered once again in services where the surplus rose 1.0 percent to $64.8 billion. Demand for U.S. services is tied to the nation’s technical and managerial skills. Exports of goods also rose, up 0.2 percent to $127.2 billion and reflecting a welcome $0.9 billion jump in consumer goods to $16.7 billion. Auto exports were also strong, up $0.6 billion to $13.2 billion.
Demand for imports is centered in capital goods, up $1.3 billion in the month to $52.8 billion which, in this case, is positive for the U.S. economy pointing to increased domestic investment in future output improvements and productivity. Crude oil imports, always a negative in the trade data, rose $0.5 billion to a monthly $11.8 billion.
By country, the nation’s trade gap with China widened to $31.6 billion in May from April’s $27.6 billion with Mexico also showing a large increase to $7.3 billion from $6.3 billion (note that country data, unlike other data in this report, are unadjusted for seasonal and calendar variations).
The nation’s trade imbalance is running about even with earlier in the year pointing, with June data still to go, to little effect for second-quarter GDP.
Balance of Trade
Balance of Trade vs. First Quarter
Compared to the first quarter, the trade deficit is running slightly higher on average. With one month left to go, net exports rate to subtract a bit from second quarter GDP (-0.2 to -0.5 percentage points). To pick a specific number, call it -0.35.
Mike “Mish” Shedlock
Medex Man said:
O/T — a significant 5.8 earthquake was recorded in Montana early this morning. the biggest tremor in over 20 years…
Either our blog host has been moving a LOT of his stuff out of Illinois…
Or (my preferred explanation), the giant egos of central banking just had their luggage pre-delivered to Jackson Hole WY, and the weight has tilted the entire Yellowstone caldera.
Tony Bennett said:
May? What is the lead time on international trade? 6 months? Trump just elected and markets booming with the onset of The Great Trump Reflation.
The signal to noise ratio on these government statistics is so low that they just don’t matter. Wall Street gets all excited when a number prints because they can scare the *$(% out of customers that don’t think — call it commissions or panic churning, but the smart money doesn’t trade headlines.
Despite the self importance of western media — no one running an actual business is making decisions based on political promises (no matter what the candidate). Trump is no different.
Companies like Tesla that rely on taxpayer subsidies for 110% of their “success” are going to be in trouble, as Trump isn’t likely to give away the store like Obama did for some allegedly green nonsense. Musk is worried he will have to compete on an even playing field, based on his product instead of his politics…. but in the grand scheme of things that isn’t going to noticeably impact international trade.
Politics have been given undue importance in headlines, as the quality of “news” has plummeted. Bankrupt governments (there is a list of them published in every G20 publication) do not make the world go ’round.
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