U.S. trade deficit narrows in May on positive exports growth and modes drop in imports

U.S. trade deficit narrowed in May. The trade balance came in at a deficit of USD 46.5 billion, as compared with the consensus expectations of a deficit of USD 46.3 billion. The rebound in trade balance was mainly due to the both positive exports growth and a modest decline in imports. Total exports rose 0.4 percent sequentially, after two straight months of drop, driven by solid services exports.

Goods exports recovered only modestly, as strength in automotive and consumer goods exports were countered by a drop in exports of food & beverage and capital goods. Looking at the imports side of the report, total imports fell 0.1 percent sequentially, driven mainly by a drop in goods imports, while services imports rose 1 percent sequentially.

The details of the goods trade balance seen in today’s report imply higher inventories and equipment investment. But on a real basis, exports were lower and imports were higher than was factored before the release of today’s report.

“On balance, our GDP tracking estimate was revised lower by one-tenth to 2.4 percent q/q saar”, said Barclays in a research report.

At 20:00 GMT the FxWirePro's Hourly Strength Index of US Dollar was neutral at 15.7555. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex

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