The U.S. merchandise-trade deficit unexpectedly narrowed for a third month in November to the smallest shortfall in three years as exports increased and imports declined, the latest sign that economic growth is holding up at the end of the year.
The gap decreased to $63.2 billion from $66.8 billion the prior month, according to Commerce Department data released Monday that compared with forecasts for a widening to $68.7 billion. Exports rose 0.7% while imports dropped 1.3%
Key Insights
- The further narrowing of the trade deficit will help give a boost to growth in the fourth quarter. Imports were a slight drag on gross domestic product growth in the two prior periods, while exports of goods provided a slight tailwind in the third quarter after weighing in the prior three-month period.
- The report comes after the U.S. and China agreed this month to the first phase of a trade agreement in which Washington will ease tariffs, and at least temporarily calm fears of an escalating trade war between the world’s two largest economies. Chinese Vice Premier Liu He is set to lead a delegation to Washington on Dec. 28 to sign the deal, the South China Morning Post reported on Dec. 30.
- Exports got a boost from a 3.4% increase for automotive products and 2.6% gain for consumer goods, while imports decreased across industrial supplies, consumer products and capital goods.
The report also showed retail inventories dropped 0.7% in the month as wholesale inventories were little changed. Analysts look to these numbers to adjust estimates for economic growth during the quarter.
Exports and imports of goods account for about three-fourths of America’s total trade; the U.S. typically runs a deficit in merchandise and a surplus in services.
By Jeff Kearns
