US trade deficit widens unexpectedly in May on oil

America's foreign trade balance in goods increased sharply last month amid a slide in exports, but likely driven only by oil.

According to a preliminary estimate from the US Department of Commerce, in seasonally adjusted terms, the US trade deficit in goods widened at a 5.1% month-on-month pace in May to reach $74.3bn.

The median forecasts from the consensus had in fact been for a narrowing to $68.3bn.

Versus April, exports fell at a month-on-month pace of 5.8% to reach $90.1bn, while imports decreased by 1.1% to $164.4bn.

"We’ll need to wait for the full report, though, to see if the oil numbers accounted for the all the shift. Ex-industrial supplies, exports and imports fell by 2.5% and 3.1% respectively, so the deficit dipped slightly," said Ian Shepherdson at Pantheon Macroeconomics.

"The deficit has fallen sharply in recent months because the collapse in domestic demand has depressed imports by more than exports, so net trade might make a positive contribution to Q2 growth, but it will be completely swamped, either way, by the drop in consumption and capex."