Strength in consumer exports helped narrow the nation's trade deficit in goods, to $65.9 billion in May vs a downward revised $67.1 billion in April. The gap so far in the second quarter is running only slightly above the first quarter, and a narrowing to $64.9 billion in June would help net exports pull even in the quarter's GDP.
Exports of consumer goods, which like vehicles have been very weak, jumped 6.0 percent in May to $16.8 billion. Exports of vehicles rose 4.8 percent to $13.2 billion. Exports of capital goods, however, fell 0.4 percent to $43.4 billion in an indication of weakness in global business investment. Total exports of goods rose 0.4 percent to $127.1 billion.
Total imports of goods fell 0.4 percent to $193.0 billion with imports of consumer goods, which have been running high, down 3.8 percent to $49.4 billion. Imports of vehicles fell 2.4 percent to $29.2 billion while imports of capital goods, in a welcome positive for domestic business investment, rose 2.3 percent to $52.7 billion. Petroleum was not a factor in the month as imports of industrial supplies were little changed at $42.2 billion.
This report also includes advance inventory data which, after contracting in April, moved back into the plus column in May and is also a positive for GDP. Wholesale inventories rose 0.3 percent with the build, in a plus, concentrated in durable goods while retail inventories rose 0.6 percent with this build concentrated in vehicles. The build in retail vehicles is probably welcome though sales trends have been flat.
Opening second-quarter GDP on the defensive, the goods deficit deepened 3.5 percent in April to $68.4 billion. The Econoday consensus is calling for improvement in May to $66.0 billion. Advance data for wholesale and retail inventories in May, which both fell in April, will also be released with this report.