U.S. Goods Trade Deficit Hits $105.8 Billion in May, Biggest Shortfall in Over a Year

The U.S. merchandise trade deficit widened sharply in May, surging 27.4% from April to $105.8 billion—the largest shortfall in more than a year, according to Commerce Department data released June 26. The figure, unadjusted for inflation, far exceeded the median economist estimate of $85 billion in a Bloomberg survey. Exports of goods plummeted 5.4%, driven by declines in industrial supplies—including crude oil and petroleum products—while imports climbed 3.6%. The drop in exports follows record-high U.S. oil exports in April, which were fueled by disruptions in Middle East trade due to the Iran war. Shipping flows through the Strait of Hormuz have since increased, and oil prices have eased following progress in U.S.-Iran peace talks, though Asian refiners are cutting back on U.S. crude imports due to high shipping costs. The report also highlighted a steep decline in exports of volatile consumer goods and capital goods, which had hit a record high in April. Meanwhile, imports of capital goods—including computers, semiconductors, and telecommunications equipment—continued their upward trend, rising nearly 42% year-over-year. Consumer goods imports reached their highest level in six months. Separate data showed U.S. consumer spending accelerated in May despite inflation hitting its fastest pace in over three years. Companies are also stockpiling goods and materials amid growing supply chain delays, raising concerns about further price increases. Retail inventories rose 0.6% in May, while wholesale inventories increased 0.3% month-over-month and 4.3% year-over-year—the strongest 12-month growth in three years. More comprehensive May trade data, including the services balance, is scheduled for release on July 7. Earlier this year, net exports weighed on GDP growth more than at any point in the past year.