Deficit In Cross-Border Goods Trade Deeper-Than-Expected

Net exports are not improving which looks to be a negative for second-quarter GDP. The US deficit in cross-border goods trade came in at a much deeper-than-expected $74.6 billion masking, however, a strong 3.0 percent rise in exports to $140.2 billion. But imports outmatched the rise with a 3.7 percent increase to $214.7 billion.

Exports of foods, feeds & beverages are a major plus for May, up 6.1 percent to $11.9 billion though year-on-year contraction is still substantial at minus 9.1 percent. Capital goods exports are also strong, up 3.5 percent to $46.3 billion with this yearly contraction at 3.8 percent. Vehicle exports rose 4.7 percent to $13.8 billion and show a 1.5 percent yearly gain.

Imports of foods fell 0.5 percent in May to $12.8 billion with all other categories, however, showing sharp increases especially vehicles at a 7.5 percent monthly gain to $33.2 billion for a yearly increase of 10.9 percent. Consumer goods imports rose 2.7 percent to $55.5 billion in the month but are down 2.4 percent on the year.

Second-quarter GDP aside, the year-on-year pace for both imports and exports is a special plus in today's report. These readings had been dipping into the negative column this year with May's gains perhaps easing concerns over deepening contraction in global trade.