US goods trade deficit widens to biggest in more than a year

[WASHINGTON] The US merchandise-trade deficit widened in May to the biggest in more than a year as exports fell and imports rose.

The shortfall in goods trade grew 27.4 per cent from the prior month to US$105.8 billion, Commerce Department data showed Friday (Jun 26). The figure isn’t adjusted for inflation. The median estimate in a Bloomberg survey of economists called for an US$85 billion deficit. 

US exports of goods decreased 5.4 per cent, propelled by a decline across categories including outbound shipments of industrial supplies, a category which includes crude oil and petroleum products. Imports rose 3.6 per cent.

US oil exports surged to record levels in April as the Iran war severely disrupted the Middle East trade. Flows through the Strait of Hormuz have ramped up this month and prices have come down following progress in US-Iran peace negotiations. Asian fuel makers are also reducing their intake of US oil because of steep shipping costs.

The report showed large declines in exports of both the volatile consumer goods category and capital goods, which in April had advanced to a record high.

Meanwhile, there has been a steady flow of equipment into the US for the data centre build out in recent months. In May, imports of capital goods – a category which includes computers and accessories, semiconductors and telecommunications equipment – continued to rise, Friday’s data showed. From a year earlier, they were up nearly 42 per cent.

Imports of consumer goods rose to the highest level in six months. A separate report on Thursday showed US consumer spending accelerated in May even as prices rose at the fastest pace in more than three years.

Companies have also been building stockpiles of goods and materials as supply-chain delays have become more widespread, fuelling concerns about additional price hikes, according to recent surveys of purchasing managers.

The latest advance economic indicators report showed retail inventories advanced 0.6 per cent in May. Wholesale inventories were up 0.3 per cent on the month and 4.3 per cent from a year earlier, marking the best 12-month stretch in three years.

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More complete May trade figures that include the balance on the services account are due July 7. A separate report on Thursday showed that in the first quarter, net exports subtracted from the government’s calculation of gross domestic product by the most in a year. BLOOMBERG