Trade Deficit Widens, Import Prices Decline

- The Trade Deficit for April rose to -$57.0B versus estimates of -$58.0B and -$53.6B in March.
- The Import Price Index for May fell 1.3% versus estimates of a .4% decline and an upwardly revised 1.2% gain in April.

BOTTOM LINE: The US trade deficit widened as Americans paid more for oil and bought more goods from China. However, US exports hit an all-time record. The number showing March’s deficit was narrower than first reported suggests first-quarter economic growth will be revised higher.

Prices of goods imported into the US declined in May for the first time this year, reflecting a drop in the costs of petroleum, building materials and automobiles. Excluding petroleum, the import price index declined .3%, the largest drop since August 2003. The price of imported building materials fell 3.9% in May after falling 2.0% a month earlier. Steel imports rose 30% during the first quarter versus a year earlier. This is one of the main reasons for the roughly 30% decline in prices for the metal since August of last year.