Trade Deficit Falls On Pull Back In Imports

A sharp pull back in imports, not strength in exports, led a much sharper-than-expected fall in November's trade deficit to $49.3 billion. Imports, reflecting price declines for petroleum as well as a $4.3 billion drop in consumer goods especially cell phones, fell $7.7 billion in the month while exports also fell, down $1.3 billion and largely reflecting oil-related declines for supplies and materials.

Looking at the goods to services split, the goods deficit fell $6.7 billion to $71.6 billion while the services surplus slipped $0.3 billion to $22.3 billion.

Country deficits show China down $2.8 billion to $35.4 billion with imports down $2.9 billion to $42.8 billion but exports not showing improvement, $0.1 billion lower to $7.4 billion. This comparatively low export total is a reminder of ongoing trade negotiations and the U.S. push for China to raise imports.

November's monthly total together with October's revised $55.7 billion averages to $52.5 billion per month in the first two months of the fourth quarter which compares with a monthly $52.9 billion in the third quarter. This points, despite general weakness for exports, to a neutral to improved contribution for net exports which may lift fourth-quarter GDP estimates.