U.S. advance goods trade deficit narrows in May, global growth to continue to support export growth

U.S. advance goods trade balance recorded a nominal deficit in May, narrower than consensus expectations. U.S. goods trade balance deficit narrowed to USD 65.9 billion in May from April’s deficit of USD 67 billion. Consensus expectations were for the deficit to come in at USD 66 billion.

Nominal goods exports grew 0.4 percent on a sequential basis, led by solid exports of automotive vehicles that rose 4.8 percent and consumer goods that grew 6 percent. Both these components rebounded following two months of declines. Meanwhile, exports of foods and beverages dropped sharply by 6.4 percent on a sequential basis, countering some of the gains.

In nominal terms, exports grew 6.8 percent year-on-year, continuing with the upward momentum seen since early 2016. The rebound in exports is driven partly by the upturn in global growth and is expected to continue underpinning export growth in the near future, noted Barclays in a research report.

Meanwhile, nominal goods imports dropped 0.4 percent on the month. Capital goods imports were up a solid 2.4 percent for the second consecutive month, which augurs well for business investment spending this quarter. Imports of other goods imports and capital goods were up strongly on the month. However, consumer goods imports dropped 3 percent on a sequential basis.

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