The Bureau of Economic Analysis and the Census Bureau said that the U.S. trade deficit edged slightly higher, up from $40.70 billion in April to $41.87 billion in May. The deficit has been highly volatile so far this year, ranging from $37.25 billion in February to $50.57 billion in March, but the year-to-date average of $42.57 billion in 2015 is nearly identical to the $42.36 billion average observed in all of 2014. The May increase stemmed largely from a decline in goods exports (down from $129.34 billion to $127.72 billion) that more than offset the decrease in goods imports (down from $189.65 billion to $189.23 billion). At the same time, the service sector trade surplus inched up marginally from $19.62 billion to $19.64 billion.
On the positive side, the petroleum trade deficit narrowed from $6.82 billion to $5.78 billion, which was the lowest since February 2002. Petroleum imports were $15.30 billion, down 45.8 percent year-over-year from $28.24 billion in May 2014. Much of this decline is price, which fell from an average of $96.12 per barrel in May 2014 to $50.76 a barrel in May 2015. Still, the quantity of barrels imported was also lower, down from 212.98 million barrels to 201.88 million barrels. Meanwhile, petroleum exports increased from $8.55 billion in April to $9.52 billion in May; this represents progress from the $7.67 billion level observed in March but remains lower than the $13.04 billion seen in May 2014.
The goods exports data pulled lower by reduced levels for non-automotive capital goods (down $2.44 billion) and consumer goods (down $80 million). This was somewhat counteracted by higher exports for industrial supplies and materials (up $804 million), foods, feeds and beverages (up $181 million) and automotive vehicles and parts (up $106 million). On the other side of the ledger, the goods imports figures were largely mixed. Increased imports for automotive vehicles and parts (up $847 million) and consumer goods (up $16 million) partly offset decreases for non-automotive capital goods (down $781 million), industrial supplies and materials (down $604 million) and foods, feeds and beverages (down $382 million).
Overall, however, this report continues to show how much manufacturers have struggled from global headwinds through the first five months of this year. Manufactured goods exports totaled $466.45 billion year-to-date using non-seasonally adjusted data, which is down 4.52 percent from the $488.53 billion in the same time period last year. 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).
This is yet another reminder that manufacturers need policies that help to reduce trade barriers for its products, helping to make our goods more competitive globally. Building on the recent bipartisan signing of Trade Promotion Authority legislation, this includes passage of market-opening and high-quality new trade agreements with terms meaningful for manufacturers, reauthorization of the Export-Import Bank and enacting the Miscellaneous Trade Bill.
Chad Moutray is the chief economist, National Association of Manufacturers.