The numbers: The trade deficit jumped 8.4% in May to the highest level of 2019, reflecting record U.S. auto imports from Mexico and other countries.
The deficit rose to $55.5 billion from a revised $51.2 billion in April, the government said Wednesday. That’s the biggest gap since December.
Economists polled by MarketWatch had forecast a $54.4 billion deficit.
What happened: U.S. exports rose 2% to $210.6 billion. The U.S. shipped more soybeans, autos and parts, passenger planes and networking equipment.
Soy exports are running slightly ahead of last year’s pace, suggesting farmers have somewhat recovered from disruptions caused by U.S.-China trade tensions. China is a big buyer of Midwestern soy.
Imports increased a larger 3.3% to $266.2 billion. The U.S. imported more foreign autos, oil, semiconductors, computers and cell phones. Auto imports hit a record high.
The trade gap with China rose slightly in May to $31.1 billion, but it’s running behind last year’s pace owing to U.S. tariffs.
Yet the U.S. is still on track to record a larger annual trade deficit in 2019 compared to the prior year because trade gaps have increased with other key partners such as Mexico, Europe and Canada. The deficit with Mexico in May, for example, was the largest ever.
Big picture: The trade deficit widened in the first two months of the second quarter and is likely to subtract from GDP. U.S. exports have slowed owing to a weak global economy, but imports haven’t dropped off as much. Americans incomes are rising slowly and can afford to buy more foreign goods.Read More
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