US oil exports hit record levels in April as the Iran war severely disrupted Middle East trade. (Mark Felix/Bloomberg)
key takeaways:
- The U.S. merchandise trade deficit widened 27.4% to $105.8 billion in May, the largest decline in more than a year.
- Exports fell 5.4% while imports rose 3.6%, with imports of capital goods nearly 42% higher than a year earlier.
- More complete trade data for May, including the balance of services, are due on July 7.
The US merchandise trade deficit widened to its largest in more than a year in May as exports fell and imports rose.
According to Commerce Department data on June 26, the deficit in goods trade widened 27.4% from the previous month to $105.8 billion. This figure has not been adjusted for inflation. The average estimate in a Bloomberg survey of economists called for a deficit of $85 billion.
U.S. goods exports declined 5.4% due to declines in all categories including outbound shipments of industrial supplies, a category that includes crude oil and petroleum products. Imports rose 3.6%.
US oil exports hit record levels in April as the Iran war severely disrupted Middle East trade. Flows through the Strait of Hormuz have increased this month and prices have declined following progress in US-Iran peace talks. Asian fuel producers are also reducing their intake of US oil due to steep shipping costs.
The report showed big declines in exports of both the volatile consumer goods category and capital goods, which had hit record highs in April.
Meanwhile, there has been a steady flow of equipment into the US for data center construction in recent months. In May, imports of capital goods – a category that includes computers and accessories, semiconductors and telecommunications equipment – continued to rise, data for June 26 showed. From a year ago, they were up nearly 42%.
Imports of consumer goods reached the highest level in six months. A separate report dated June 25 showed that US consumer spending accelerated in May, while prices rose at the fastest pace in more than three years.
According to recent surveys of purchasing managers, companies are also stockpiling goods and materials as supply chain delays become more widespread, raising concerns about additional price increases.
The latest advance economic indicators report showed that retail inventories rose 0.6% in May. Wholesale inventories rose 0.3% this month and 4.3% from a year earlier, the best 12-month expansion in three years.
More complete trade figures for May, including balances on service accounts, are due on July 7. A separate report on June 25 showed that in the first quarter, net exports from the government’s calculation of GDP declined by the most in a year.
