US MAY TRADE DEFICIT STUNS AT ANOTHER RECORD -$21.3 BLN
08:34 EDT 07/20 --Imports +$2.1b: Oil-Related +$773m, As Crude Price Surges 14% --Exports -$0.6b: Aircraft -$221m, Western Europe Not Buying --Asia Trade: Japan Gap -$5.3b, China -$5.3b, NICs -$1.95b
By Joseph Plocek
WASHINGTON (MktNews) - The U.S. May trade deficit hit another record -$21.3 billion, up from a revised -$18.6 billion in April, the Commerce Department said Tuesday, as a strong U.S. economy continued to suck in imports.
The trade report showed a much wider than expected deficit. The median estimate for May trade in a Market News International poll of economists was for a $19.2 billion deficit.
The report confirms that the trade sector will subtract from U.S. growth in 2Q, albeit at a lesser pace than in 1Q. The seasonally adjusted April-May constant dollar measure of exports was up 2.9% over its 1Q average, but imports were up a stunning 4.6%. In contrast, 1Q exports were down 1.7% and imports up 4.2%.
Imports surged 2.2% or $2.1 billion in May to another record, with oil and related products accounting for $773 million or about a third of the gain. This was largely due to the price of crude oil jumping more than 14%, its highest point since December 1997, but a movement that has partly reversed in June and July.
Other import categories were very strong as well, confirming the strength of demand in this country. Autos were up $816 million and other capital goods rose $919 million as telecommunications, computers, and aircraft gained.
Exports fell 0.8% or $0.6 billion, with aircraft down $221 million and machinery and art weak as well. Exports of medicinal equipment, evacuating machinery, and paper equipment were hardest hit. Aircraft weakness was somewhat expected as Boeing Company reported 23 foreign deliveries in May, down from 28 in April.
There are still wide trade gaps with Japan (at -$5.3 billion), China (at -$5.3 billion) and the Newly Industrialized Countries of Asia (at -$1.95 billion).
But the newest trade problems, related only in part to the higher oil market, are Mexico and Europe. The trade gap with Mexico hit -$2.25 billion, up from -$1.7 billion in April as imports surged. This was the second highest deficit with Mexico on record. The Western Europe deficit was -$3.55 billion, versus -$2.9 billion in April, as Germany and Italy bought less from the U.S. The services sector continues to post a surplus, showing a $6.9 billion positive for May, about the same as the monthly average in 1998. The main factor behind the surplus is travel, as the U.S. remains a popular destination. Record services exports remains the one bright factor ameliorating the trade deficit. |
