A large USD 1.9 billion trade surplus was recorded in May, in line with expectations. Year-to-date, a trade surplus of USD 10.0 billion has been accumulated (USD 8.1 billion at the same point last year). Likewise, the rolling one-year trade balance rose to USD 17.3 billion (USD 15.3 billion in 2023). The annualized quarterly trade balance sits at USD 19.4 billion (SA). Exports in the month were pulled up by copper (+28% yoy), leading to total exports rising 3.7% yoy (15.6% in April). Imports contracted 6.5% yoy (+1.6% in April) as consumer goods fell 5.5% (ending a two month spell of annual growth). Energy imports also declined, while capital goods imports continued to contract at a double-digit rate (machinery for mining and construction down nearly 40%; in line with weak investment dynamics expected).
The weakness of capital goods imports continued. Mining exports increased by 14% YoY during May, with copper up 28% (8.1% in 1Q24). Lithium exports contracted by 44% during May, continuing to correct from prior highs (-22% during April; -45% in 1Q24). Manufactured exports decreased 11% YoY, returning to negative variations after the +4% in April. On the imports front, non-durable consumer goods purchases posted a 7% YoY decrease (+7% in April), while durables goods imports registered a 2% contraction (+1.2% in April). Total consumer goods imports decreased by 6% (+4.9% in April). At the same time, capital goods imports continued to decline by double-digits (-13%; -11.9% in April), while energy imports fell by 5% (+11% in April). Sequentially, exports grew 4.3% QoQ/Saar, while total imports increased a milder 3.2% QoQ/Saar.
Our take: While the gradual recovery of domestic demand should lead to a rise in imports (particularly consumer goods), elevated copper prices will favor the continuance of a sustainable CAD this year (downside bias to our 3.8% call).