The monthly May trade figures show that even as the energy revolution keeps improving America's overall performance, trade flows strongly influenced by trade deals and related policies keep producing historically high deficits and therefore remain drags on growth. Moreover, the still-worsening Korea goods deficit indicates that President Obama's proposed Pacific Rim trade deal will bring more of the same, since it is modeled on the 2012 Korea agreement.
Here are selected highlights of the latest monthly (May) trade balance figures released this morning by the Census Bureau:
- Despite the lowest monthly U.S. oil deficit since December, 2001, the combined goods and services trade deficit rose in May rose by 2.88 percent on month, from a downwardly revised $40.70 billion to $41.87 billion. These figures kept the shortfall running slightly (0.51 percent) ahead of last year's pace on a January-May basis.
- The May oil trade gap, in current dollars, shrank by 15.27 percent on month, to $5.78 billion, just slightly higher than December, 2001's $5.50 billion.
- Thanks to the interacting effects of lower global energy prices, a sluggish world economy, and America's energy production revolution, for the first five months of the year, the U.S. oil trade deficit of $38.44 billion was only 43 percent as big as 2014's comparable figure.
- America's dramatically reduced oil trade performance helped produce an historic development in May – the first monthly merchandise trade surplus with Canada, its largest two-way trade partner, since monthly data have been published (1985). The $644.1 million goods figure contrasts with the $169.3 million deficit for April. The next best U.S. monthly goods trade figure with Canada was the $95.8 million deficit run in April, 1990.
- By contrast, the U.S. non-oil goods deficit rose month-to-month in May by 3.90 percent, from $52.60 billion to $54.65 billion – the second highest level ever for this portion of American trade flows, which unlike oil trade is heavily influenced by trade agreements and related policies. (March's $61.76 billion is the all-time high monthly non-oil goods total.)
- May overall worldwide U.S. exports fell by 0.77 percent, to $188.60 billion, from their upwardly revised April level of $190.07 billion. The much larger amount of May combined imports ($230.47 billion) was only 0.13 percent lower than the downwardly revised $230.77 billion April figure.
- Year-to-date so far, overall exports have decreased by 2.73 percent, versus a 2.15 percent decline for the greater influx of combined imports.
- The U.S. China merchandise trade deficit rebounded strongly in May as well – by 15.01 percent, from $26.48 billion in April to $30.45 billion. The increase was led by a 5.99 percent monthly drop in U.S. Goods exports to China – from $9.32 billion to $8.76 billion.
- Year-to-date, U.S. goods exports to China are down 6.07 percent – more than the 5.12 percent fall-off in overall U.S. goods exports. Moreover, whereas U.S. global goods imports are down 3.50 percent on year, they're up by 6.25 percent from China.
- Although the manufacturing-heavy U.S. China trade deficit worsened, the overall American manufacturing trade deficit actually improved slightly in May – from $66.70 billion to $66.55 billion. Manufactures exports dipped by 0.61 percent on month while the much greater amount of imports was lower by 0.45 percent.
- At the same time, at $320.33 billion, the manufacturing trade deficit this year is running 15.23 percent ahead of last year's record pace. January-May American manufactures exports have sunk by 4.25 percent, while imports have increased by 2.51 percent.
- The U.S. goods trade deficit also worsened with new free trade partner Korea, whose 2012 deal with Washington is described by the Obama administration as the model for its proposed Trans-Pacific Partnership trade agreement.
- At $2.75 billion, the merchandise deficit with Korea was 9.76 percent higher than the April figure, and more than five times its level on a monthly basis than when the bilateral deal went into effect in March, 2012.
- Especially troubling – U.S. goods exports to Korea are down 12.51 percent since then on a monthly basis. Since March, 2012, U.S. global goods exports are only down by 3.12 percent according to the same measure.
- U.S. trade in high tech goods deteriorated in May as well. The longstanding deficit rose by 13.55 percent on month to its highest level of the year – $7.23 billion. Both U.S. high tech exports and imports fell.
- Year-to-date, this high tech deficit is 2.32 percent greater than the January-May, 2014 figure, but fully 9.41 percent below 2013's comparable number.
- Although Canada's monthly merchandise trade with the United States turned into an historic U.S. surplus, the nation's other NAFTA partner, Mexico, saw its own goods surplus with America resume rising – by 3.64 percent on month, to $4.56 billion.
- The merchandise deficit with the struggling Eurozone rose slightly in May, but the goods trade shortfall with Japan plummeted by more than 23 percent, to $5.32 billion, mainly because U.S. Goods imports dropped by 15.48 percent.
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