US goods trade deficit widens in May as exports fall

[WASHINGTON] The US trade deficit in goods increased in May amid a decline in exports, but an ebbing inflow of imports likely positions trade to make a big contribution to gross domestic product in the second quarter.

The goods trade gap widened 11.1 per cent to US$96.6 billion last month, the Commerce Department’s Census Bureau said on Thursday (Jun 26). Exports of goods dropped US$9.7 billion to US$179.2 billion. Goods imports were little changed at US$275.8 billion.

A flood of imports as businesses rushed to bring in goods before President Donald Trump’s sweeping tariffs came into effect boosted the goods trade deficit to a record high in the first quarter, accounting for much of the 0.5 per cent annualised rate of decline in GDP during that period.

The Atlanta Federal Reserve is forecasting GDP accelerating at a 3.4 per cent rate this quarter. Given the gyrations from imports, economists cautioned against interpreting the anticipated bounce back in GDP as a sign of economic strength.

Data on retail sales, the housing and labour markets have suggested economic activity is softening. REUTERS