Washington: The US trade deficit widened sharply in May to its highest level in more than a year, as exports declined and imports rose, official data showed on Tuesday. The goods and services deficit increased by 42.2% to $77.6 billion in May, up from a revised $54.6 billion in April.

According to Anadolu Agency, the US Census Bureau and Bureau of Economic Analysis reported that exports fell 3.2% to $317.7 billion, while imports rose 3.3% to $395.3 billion. The deficit figure was slightly below market expectations, which had anticipated a $78.4 billion gap.

The increase in the deficit was largely due to a $23.6 billion rise in the goods deficit, reaching $106.5 billion, while the services surplus saw a modest increase of $0.6 billion to $28.9 billion. Goods exports dropped by $11.3 billion to $210.6 billion, led by a significant $5.5 billion decline in industrial supplies and materials. Notably, nonmonetary gold exports decreased by $6.2 billion, although crude oil exports rose by $2 billion. Capital goods exports, including computers and computer accessories, also declined by $3.5 billion.

On the import side, goods imports increased by $12.3 billion to $317 billion, driven by heightened demand for consumer goods, industrial supplies, autos, and capital goods. There was a notable $1.2 billion rise in imports of computer accessories and a $1 billion increase in semiconductors, while computer imports fell by $3.4 billion.

In real terms, the goods deficit grew by 18.7% to $100 billion in May, as real goods exports declined by 6.6% and real goods imports rose by 1.9%. This widening deficit is expected to impact second-quarter growth calculations, as net exports subtract from gross domestic product when imports surpass exports. The FT-900 trade report remains the primary source for goods trade data used in US GDP estimates, as noted by the BEA.