US trade deficit widens to largest gap in more than a year in May

The US trade deficit widened sharply in May to its highest level in more than a year, as exports declined and imports rose, official data showed on Tuesday.

The goods and services deficit rose 42.2% to $77.6 billion in May, from a revised $54.6 billion in April, according to the US Census Bureau and Bureau of Economic Analysis.

Exports fell 3.2% to $317.7 billion, while imports increased 3.3% to $395.3 billion.

The figure came slightly below market expectations of a $78.4 billion deficit.

The increase in the deficit reflected a $23.6 billion rise in the goods deficit to $106.5 billion, while the services surplus increased by $0.6 billion to $28.9 billion.

Goods exports fell $11.3 billion to $210.6 billion in May, led by a $5.5 billion decline in industrial supplies and materials. Nonmonetary gold exports decreased by $6.2 billion, while crude oil exports rose by $2 billion. Capital goods exports also fell $3.5 billion, with computers and computer accessories both declining.

Goods imports rose $12.3 billion to $317 billion, driven by increases in consumer goods, industrial supplies, autos and capital goods. Imports of computer accessories increased by $1.2 billion and semiconductors rose by $1 billion, while computer imports fell by $3.4 billion.

In real terms, the goods deficit increased 18.7% to $100 billion in May, as real goods exports declined 6.6% and real goods imports rose 1.9%.

The wider deficit is expected to weigh on second-quarter growth calculations, as net exports subtract from gross domestic product when imports outpace exports. The FT-900 trade report is the primary source for goods trade data used in US GDP estimates, according to the BEA.