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.