US Trade Deficit Jumps In May As Stronger Dollar Puts A Lid On Exports

Tyler Durden's picture

Confirming once again that a rising dollar is not good for US trade, moments ago the dept of commerce announced that the goods and services deficit was $41.1 billion in May, up $3.8 billion from $37.4 billion in April, and worse than the $40 billion expected. In fact, this was the first miss on expectations (a bigger than expected deficit) since October 2015.

The rising deficit was a function of a modest decline in exports - courtesy of a stronger dollar - which dropped by $0.3 billion to $182.4 billion, while May imports rose $3.4 billion to $223.5 billion.

The May increase in the goods and services deficit
reflected an increase in the goods deficit of $3.7 billion to $62.2
billion and a decrease in the services surplus of $0.1 billion to $21.1
billion. Year-to-date, the goods and services deficit
decreased $7.2 billion, or 3.5 percent, from the same period in 2015.
Exports decreased $47.2 billion or 4.9 percent. Imports decreased $54.3
billion or 4.7 percent.

 

Breaking the trade components down, Exports of goods decreased $0.2 billion to $119.8 billion in May.

Exports of goods on a Census basis decreased $0.4 billion:

  • Capital goods decreased $0.8 billion.
  • Civilian aircraft decreased $0.4 billion.
  • Computer accessories decreased $0.3 billion.
  • Automotive vehicles, parts, and engines decreased $0.3 billion.
  • Other parts and accessories decreased $0.3 billion.
  • Foods, feeds, and beverages increased $0.5 billion.

Exports of services decreased $0.1 billion to $62.5 billion in May.

  • Travel (for all purposes including education) decreased $0.2 billion.
  • Financial services increased $0.1 billion.

On the imports side, Imports of goods increased $3.4 billion to $182.1 billion in May.

Imports of goods on a Census basis increased $3.3 billion.

  • Industrial supplies and materials increased $2.3 billion.
  • Nonmonetary gold increased $1.0 billion.
  • Crude oil increased $0.7 billion.
  • Consumer goods increased $1.3 billion.
  • Capital goods decreased $0.9 billion.
  • Civilian aircraft decreased $0.9 billion.

Imports of services were nearly unchanged at $41.4 billion in May.

  • Financial services increased less than $0.1 billion.

Breaking it down geographically:

  • The deficit with China increased $1.7 billion to $28.3 billion in May. Exports decreased $0.1 billion to $9.3 billion and imports increased $1.6 billion to $37.6 billion.
  • The balance with the United Kingdom shifted from a surplus of $0.7 billion to a deficit of $0.3 billion in May. Exports decreased $1.2 billion to $4.0 billion and imports decreased $0.2 billion to $4.3 billion.
  • The deficit with Japan decreased $0.9 billion to $5.0 billion in May. Exports increased $0.6 billion to $5.4 billion and imports decreased $0.3 billion to $10.4 billion.

Finally, the US trade balance excluding petroleum was down to $38 billion, near cycle lows.

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Dead Canary's picture

You know, two or three years from now, these clowns are going to be huddled around a small fire in the middle of a living room, in the windowless ruin of what was once their home.  Cooking what is left of the dog they killed three days ago and say, "You know, I sure wish I'd listened to those guys on Zero Hedge."

DeeZ_nutZ's picture

you mean, suck putin off?

JamesBond's picture

So there is a global depression?  Who would have thought.  And by the way, the dollar is weakening lately compared to the yen.  

The Duke of New York A No.1's picture

The Chinese buying Gold/Silver at night ... then Jew York slams the price pre-market.

rejected's picture

I don't see the big deal? The dollar is a piece of shit.  Physical Gold / Silver is valuable insurance in any form. As far as I'm concerned I would not have it if I was worried about its dollar value. Then I would use paper gold. You can easily price shit to shit.

Nope, I value it the opposite. It now cost $1370 dollars to buy an ounce whereas yesterday it cost $1340. And what good is it to have $10,000 dollar gold when a loaf of bread will cost $150-$250?

Walken's picture

If a loaf of bread were to cost 150-250 dead presidents, gold would cost way more than 10k. So, it IS good. 

Ghordius's picture

it's the usual tail wagging the dog

the strenght or weakness of a (non-financialized) currency used to be trade

a trade deficit -> a weaker currency. until that deficit is zero. a trade surplus -> a stronger currency

problem is... the dollarzone expanded. just recently by a damn lot. so someone has to work in a different currency just to keep afloat. that someone is all the countries/economies not fully engaged in the currency wars

Lady Jessica's picture

By "not fully engaged" do you mean all those jurisdictions not QEing?

Mr. Kwikky's picture

I'am long on ammo, guns, gold, silver, water and FOOD.

Still keeping stacking..

29.5 hours's picture

 

The methodology is wrong. They neglect to factor in the production and massive export of dollars. This, I'm certain, will balance things out perfectly well.

 

 

Oldwood's picture

Okay...quick survey. How many Americans here are in anyway involved with producing something that is exported out of the country....and secondly, how many here have bought imports? Anyone??? What could possibly be the real ratio of import to export? AS a custom furniture maker for thirty years I would estimate we have exported at MOST .5% of our total 30 year sales.

But I would also add that virtually 95% of our tools, from bar clamps to cnc routers are imported...mostly from Europe.

How does that math work?

Xscream's picture

we export bunch of weapons. it's what we do. like gieco

Oldwood's picture

Even of that, how much of these weapons is actually produced here? Assembled with foreign made components. FN is a major US weapon supplier....out of Belgium.

mary mary's picture

Does that math mean that USA would be better off if manufactured more tools?

And, just curious, is Big Military also using tools manufactured overseas?  And if so, then is Big Military REALLY helping USA?

Edward Morbius's picture

"Confirming once again that a rising dollar is not good for US trade".

 

Bullshit. Not good for exporters, maybe, but great for importers, and my gasoline bill. Why does the other side of the equation never get mentioned???

beeeeeep's picture

When you import goods you're just exporting money that is unless there are tariffs to offset some of that exporting of money.  It may be good short term but long term it's horrible.  That's what's causing a lot of this mess.  Too many people can only see the short term good and can't see the long term harm.  Most of the people that do see it don't care and work off the f*ck-the-future principal.

heisenberg991's picture

I'm doing my best by buying Trump hats (Make America Great Again) made in china.

mary mary's picture

Foreign trade is not the only trade.  USA has resources, skilled labor, and highways.  Make stuff within USA and sell it within USA.

Walken's picture

Sure. What would be your plan to deal with overproduction?

Walken's picture

US polulation alone wouldn't be able to consume the entire US manufacturing output. Say you forcefully reduce it. What would you do with the rest of the US labour force? How would you employ them? What would you have them do?    

mary mary's picture

Stop paying people to pump out babies.  People will naturally respond by having fewer babies, and the labor force will naturally decrease to the number of people manufacturing can actually support.  It's what we would already be doing if all the liberals (some (for example, Big Military and Big Oil) pretending to be conservatives) hadn't gotten us subsidizing every business they own.