US trade deficit widens in May on weak exports

The U.S. trade deficit widened for a second straight month in May amid a decline in exports, indicating that trade likely remained a drag on economic growth in the second quarter.

The trade deficit increased 0.8 per cent to $75.1 billion, the Commerce Department's Bureau of Economic Analysis said on Wednesday. Data for April was revised slightly to show the trade gap rising to $74.5 billion instead of $74.6 billion as previously reported.



Economists polled by Reuters had forecast the deficit increasing to $76.2 billion in May.

The goods trade deficit widened 0.9 per cent to $100.2 billion, the highest since May 2022. Adjusted for inflation, the goods trade deficit rose 0.5% to $94.5 billion.

Trade subtracted from gross domestic product in the first quarter, restricting the economy to a 1.4 per cent annualized growth pace. The economy grew at a 3.4 per cent pace in the October-December quarter. Growth estimates for the second quarter are around a 2 per cent pace.

Exports slipped 0.7 per cent to $261.7 billion in May, reflecting a strong dollar as the Federal Reserve keeps interest rates higher, and slowing global demand.


Goods exports plunged 1.7 per cent to $169.6 billion. There were decreases in exports of industrial supplies and materials, mostly nonmonetary gold, other petroleum products and fuel oil. Exports of automotive vehicles, parts and engines also fell.

Services exports rose $1.1 billion to $92.1 billion, boosted by travel.

Imports fell 0.3 per cent to $336.7 billion. Goods imports declined 0.8 per cent to $269.7 billion. There were declines in imports of consumer goods, which were pulled down by pharmaceutical preparations. Imports of cell phones and other household goods, however, increased $1.0 billion.

Automotive vehicles, parts and engines imports fell $1.5 billion. But imports of industrial supplies and materials increased $1.4 billion, boosted by crude oil and nuclear fuel materials. Imports of services increased $0.9 billion to $67.0 billion, lifted by transport and travel.