The U.S. trade deficit improved in December to $38.5 billion, down from $48.6 billion in November and from $51.7 billion in December 2011, the U.S. Department of Commerce reported today. The deficit figure beat consensus estimates of about $46 billion and was the lowest monthly deficit in three years. It likely signals that the U.S. economy actually grew in the fourth quarter of 2012, not shrank as the government’s preliminary GDP figures indicated.

“In their advance estimate, the [Bureau of Economic Analysis] assumed that December exports rose by just 0.1% and imports fell by 1.3%,” noted Michael Dolega, an economist with TD Economics. “This morning's December actuals of 2.1% export growth and 2.7% retreat in imports paint a much improved net-export picture, with more than $6 billion (not annualized) added to the 12Q4 GDP output.”

December exports were $186.4 billion while imports were $224.9 billion. The goods deficit decreased $9.4 billion from November while the services surplus increased $0.7 billion. Export increases were led by petroleum products and industrial supplies. For the month, the deficit in advanced technology products shrank to $5.4 billion from the $11.8 billion in November.

“While we may see some give back in the coming months of the near 21% December shrinkage of the trade gap, the trend of a narrowing petroleum trade gap will continue to drive improvement in the overall trade balance going forward,” Dolega forecast.

The goods trade deficit with China in December was $24.5 billion. For the year, the deficit hit a record $315 billion. For its top 15 trading partners, the U.S. ran a goods trading deficit in 2012 with 13 of the 15 countries. The U.S. had trade surpluses in goods only with Brazil and the Netherlands.

“The record trade deficit with China will not disappear on its own,” said Scott Paul, president of the Alliance for American Manufacturing. “Congress and the Administration must take on currency manipulation and monetary policy, as well as China’s persistent cheating on its trade obligations and our own economic policy, which still favors outsourcing over insourcing.”

For all of 2012, the U.S. trade deficit was $540 billion, down $19.5 billion from 2011. For goods alone, the yearly deficit was $735.7 billion, an improvement of $2.7 billion from 2011.