The trade deficit widened slightly to $75.1bn in May, from $74.5bn, as exports fell by 0.7% m/m, outpacing a 0.3% m/m decline in imports. Nevertheless, the decline in exports was more modest than the advance goods data had implied, so net external demand should now be a slightly smaller (albeit still sizeable) drag on second-quarter GDP growth. Factoring in the disappointing May construction spending data released yesterday too, we now estimate that GDP growth was 1.9% annualised – a little stronger than the first quarter, but well below the economy’s immigration-boosted potential growth rate.
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