Indonesian headline inflation decelerates further in July, monetary policy stance to remain accommodative
U.S. trade deficit widens in May on fall in exports, pace of decline in global trade decelerates
The U.S. trade deficit widened in May, rising to USD 54.6 billion from April’s 49.8 billion. This is owing to exports dropping more than imports. The positive news is that the rate of fall in global trade decelerated in May. Exports fell 6 percent in May, as compared with the fall of 25 percent seen in April. Meanwhile, imports dropped just 1 percent, down from 14 percent in April. The fall in exports was seen throughout all product categories, except consumer goods that saw a 5 percent rise. Industrial supplies saw some of the largest falls, recording a decline of 12 percent. Accounting for price effects, real goods exports dropped 6 percent in May.
Delving into details, imports data gave a mixed picture. Automotive imports mainly drove most of the fall in total imports, declining 33 percent. Unlike April, a few sectors recorded positive growth. Industrial supplies and consumer goods both saw growth of 5 percent and 4 percent respectively. Stripping price effects, real imports dropped just 0.4 percent in May.
Services trade also recorded a fall; however, much smaller than in April. Exports of services fell 2 percent for the month, while imports shrank 1 percent.
The data for May gives a comparatively better picture compared to the dismal April data. While month-on-month exports and imports continued to shrink in May, they did at a comparatively slower rate. Even if the monthly contraction has eased, exports and imports are far below the levels seen last year. There is still a long way to go before trade reaches pre-pandemic levels, noted TD Economics in a research report.
“Since the U.S. and its trading partners continued to ease lockdowns throughout most of June, we expect to see better data next month. However, some states (California, Texas, Florida etc.) have recently re-enacted some of the restrictions due to a resurgence in cases. The resurgence has increased uncertainty and is likely to keep demand subdued and prevent businesses from operating at full capacity. As a result, trade statistics will improve in a tentative manner. Any improvement in trade data is also likely to be uneven, especially when it comes to trade with emerging markets, some of whom are yet to see the pandemic's peak”, added TD Economics.