US May trade deficit points to weakness in parts of economy

The US trade deficit increased by more than economists had expected in May, which was a possible indication of weakness in parts of the US economy according to some economists.

America's trade shortfall with the rest of the world jumped from a deficit of $57.5bn in the month before to $60.6bn in May, versus forecasts calling for a deficit of $59.0bn.

In nominal terms US exports dipped 0.5% month-on-month while imports jumped 1.4% over the month, driven by increases in petroleum prices, according to economists at Barclays and Pantheon Macroeconomics.

However, nominal imports excluding industrial supplies, which closely track non-petroleum imports over time, rose by 0.5% month-on-month but growth remained depressed.

For Barclays's Jesse Hurwitz, "This underlying softness could portend sluggishness in portions of the domestic economy and indicates less overall core import growth in Q2."

A fall in automotive exports was the main factor behind the 5.1% drop in overseas sales.