Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

U.S. goods trade deficit narrows; inventories increase solidly

Economy Jun 28, 2022 23:50
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. FILE PHOTO: Sea gulls sit on a lamppost beside shipping containers stacked at the Paul W. Conley Container Terminal in Boston, Massachusetts, U.S., May 9, 2018. REUTERS/Brian Snyder

By Lucia Mutikani

WASHINGTON (Reuters) -The U.S. trade deficit in goods narrowed in May as exports increased strongly, suggesting that trade could contribute to economic growth in the second quarter for the first time in nearly two years.

The report from the Commerce Department on Tuesday also showed solid increases in wholesale and retail inventories. While those gains, combined with a decline in goods imports, should provide a boost to gross domestic product growth this quarter, it also potentially signals slowing domestic demand.

The economy is on recession watch as the Federal Reserve aggressively tightens monetary police to tackle high inflation.

"Exports and inventories are still rising in May at least, and this means the recession clouds offshore will have to sit on the horizon for another month," said Christopher Rupkey, chief economist at FWDBONDS in New York.

The goods trade deficit fell 2.2% to $104.3 billion. A further narrowing is likely as spending shifts from goods to services and supply chain constraints ease.

Goods exports rose $2.0 billion to $176.6 billion. There were strong increases in exports of industrial supplies, motor vehicles, consumer goods and other goods. But food exports fell as did shipments of capital goods.

Imports of goods slipped $0.4 billion to $280.9. The decline was led by consumer goods imports, which fell 2.4%. There were also decreases in imports of food and capital goods. But imports of industrial supplies rose, likely reflecting crude oil imports, as did those of motor vehicles.

Slowing economic growth amid tighter monetary policy could weigh on imports in the months ahead.

A record trade deficit weighed on the economy in the first quarter, resulting in gross domestic product declining at a 1.5% annualized rate. Trade has subtracted from GDP for seven straight quarters. Growth estimates for the second quarter range from as low as a 0.3% rate to as high as a 2.9% pace.

"Supply-chain disruptions and very strong demand by U.S. consumers for goods contributed to the significant widening in the deficit over the past year," said Ryan Sweet, a senior economist at Moody's Analytics in West Chester, Pennsylvania.

The Fed this month raised its policy rate by three-quarters of a percentage point, its biggest hike since 1994. The U.S. central bank has increased its benchmark overnight interest rate by 150 basis points since March.

The U.S. government also reported that wholesale inventories increased 2.0% in May after rising 2.3% in April. Stocks at retailers climbed 1.1% after advancing 0.7% in April.

Motor vehicle inventories rebounded 2.3% in May after declining 2.2% in the prior month. Excluding motor vehicles, retail inventories increased 0.8% after shooting up 1.7% in April. This component goes into the calculation of GDP growth.

U.S. goods trade deficit narrows; inventories increase solidly
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email