Statistics Canada says trade deficit grew to $3.3B in May

The report said the trade deficit widened to $41.9 billion in May from a revised $40.7 billion in April. That was less than the $42.6 billion deficit expected by analysts and suggests Wall Street economists may slightly raise their forecasts for economic growth in the second quarter.

The wider deficit primarily reflected the decrease in the value of exports, which slid 0.8 percent to $188.6 billion in May from $190.1 billion in April. European policymakers are now fighting a debt crisis in Greece that threatens to rip apart the continent’s monetary union.

“The port strikes from early on this year likely generated some volatility in the trade data, but it looks like the trend in exports has been softening recently while the trend in imports has been increasing”, said J.P. Morgan Chase economist Daniel Silver.

Since the middle of a year ago when the Federal Reserve made clear it was planning to raise interest rates to keep the economy from eventually overheating, the dollar has strengthened, making USA exports less competitive. “The data are consistent with net exports being close to neutral for GDP in Q2, following a huge 1.9-point drag on the growth rate in Q1”, said Jim O’Sullivan, chief U.S. economist at High Frequency Economics. Manufactures exports dipped by 0.61 percent on month while the much greater amount of imports was lower by 0.45 percent. In May, the US recorded its first trade monthly surplus in at least 25 years, when a new accounting system went into place. Following two consecutive monthly increases, the volume of exports declined 2.5 percent in May.

Metal ores and non-metallic minerals fell 9.2 percent to $1.4 billion.

The decrease in exports was limited by a pickup in US sales of oil products and chemicals. Since March, 2012, US global goods exports are only down by 3.12 percent according to the same measure.

Partially offsetting these declines, exports of aircraft and other transportation equipment and parts rose 10.3 percent to $2.1 billion in May. This trend extends to the top four markets for U.S.-manufactured goods: Canada (down from $127.07 billion year-to-date to $119.01 billion), Mexico (down from $98.30 billion to $96.83 billion), China (down from $49.20 billion to $46.22 billion) and Japan (down from $27.57 billion to $26.90 billion). Imports from the European countries fell 2.8 per cent in May from April, but are up 1.2 per cent through the first five months of the year versus 2014. Volume figures adjust for price changes and can be a better indicator of how trade contributes to economic growth. Excluding petroleum, the deficit widened 6.5 percent in May.