Instant View: Trade gap widens in May on Chinese imports

NEW YORK (BestGrowthStock) – The trade deficit widened unexpectedly in May, led by a big jump in imports from China that helped overpower the best month for exports since September 2008.

KEY POINTS: The trade gap widened 4.8 percent to $42.3 billion, the largest since November 2008, defying a consensus Wall Street forecast for it to narrow in May to $39.0 billion.

Imports rose 2.9 percent to the highest since October 2008, led by a 12.1 percent increase in shipments from China and stronger U.S. demand for consumer goods, autos and capital goods.

The big jump in imports from China is consistent with that country’s own trade data, which showed exports rising sharply in May and June from year-ago levels.

Exports had their best showing since September 2008, when world trade was in the early stages of a deep plunge as a result of the global financial crisis.

COMMENTS: PETER JANKOVSKIS, CO-CHIEF INVESTMENT OFFICER AT OAKBROOK INVESTMENTS LLC, LISLE, ILLINOIS:

“I would say the pickup in imports was quite a surprise. Not really sure whether that is indicative of underlying strength in consumer sentiment here in the U.S. or simply the fact that the dollar has appreciated and increased buying power for overseas goods. (Futures strength) may be coming down on the side of the strong imports indicative of good consumer demand.”

SEAN SIMKO, FIXED-INCOME PORTFOLIO MANAGER WITH INVESTMENT MANAGEMENT COMPANY SEI, OAKS, PENNSYLVANIA:

“Everyone was looking for a bit of a contraction (in the trade deficit) and this is surprising to the market. I think there will continue to be pressure on exports given the fact that the dollar has strengthened.”

OMER ESINER, CHIEF MARKET ANALYST, COMMONWEALTH FOREIGN EXCHANGE, INC., WASHINGTON:

“Generally worse than consensus for the deficit, however not likely to be a major market mover. On the margin, a growing deficit could detract precious percentage points from second quarter GDP and in that respect may be mildly negative for the dollar. But in today’s scheme of things unlikely to be a major factor.”

MARKET REACTION: STOCKS: Stock index futures were little changed

BONDS: Treasury debt prices trimmed losses

DOLLAR: Dollar rose against the yen slightly

Instant View: Trade gap widens in May on Chinese imports