US trade balance narrows slightly in May
The US trade deficit increased slightly in May, reaching $41.87bn after a downwardly revised print of -$40.7bn for the prior month, on the back of lower aircraft sales.
Economists had been expecting a deficit of $42.70bn.
Exports slipped by 0.8% month-on-month, led by a drop in overseas sales of aircraft. Imports were steadier, edging lower by just 0.1% in comparison with the prior month.
To take note of the stronger greenback and continued low demand for oil saw the US register its first surplus with its northern neighbour, Canada, since 1990.
April’s reading was revised to show a deficit of $40.7bn, down from a preliminary estimate of $40.9bn.
As things now stand Paul Ashworth, chief US economist at Capital Economics, believes that net trade will subtract 0.2 percentage points from the second quarter’s rate of GDP expansion.
“The dollar's appreciation over the past 12 months means that net exports will remain a small drag on GDP growth for the remainder of this year. But, with the pace of the currency appreciation slowing in recent months, that drag should fade in 2016,” Ashworth added in a research note e—mailed to clients.