US Trade Gap Shrinks to 4-year Low

US Trade Gap Shrinks to 4-year Low

Jan. 7, 2014
 Exports of aircraft and aircraft engines, chemicals and finished metal shapes were strong.

WASHINGTON -- The U.S. trade deficit shrank sharply in November as exports hit a record high for the second straight month, official data showed Tuesday in a positive sign for economic growth.

The foreign trade deficit narrowed 12.9% from October, the second month in a row of contraction, to a four-year low of $34.3 billion, the Commerce Department reported.

That was the smallest trade deficit in goods and services with the rest of the world since September 2009.

The deficit was much lower than expected; analysts had forecast $40.4 billion. October's deficit was $39.3 billion.

November exports rose 0.9% to a record $194.9 billion. Gains came mainly from aircraft and aircraft engines, chemicals and finished metal shapes.

Imports fell 1.4%to $229.1 billion amid a decline in oil prices.

Imports of crude oil, which represent about 10% of total imports, dropped 10.8% in November to $21.4 billion.

Oil import volume fell 12.2%, underscoring that the economy is growing less dependent on foreign energy as the nation ramps up oil production.

The government predicted last month that oil output will continue to surge toward the 1970 record high over the next two years, riding the gains in production from "tight" oil -- such as shale reserves tapped by hydraulic fracturing, or fracking.

Petroleum exports, crude and products, hit a record $13.3 billion in November, while imports fell to $28.5 billion, the lowest level since November 2010. The petroleum deficit of $15.2 billion was the lowest since May 2009.

Imports of automobiles continued to rise, reaching a record $27.2 billion, the department said.

For the January-November period, the US trade gap was $435.1 billion, down 12.3% from the same period in 2012.

Economists project that US gross domestic product growth will slow in the final quarter from the robust 4.1% annual pace in the third quarter. The government reports its first estimate of fourth-quarter GDP on January 30.

The upbeat trade report came as the Federal Reserve reduces its massive monetary stimulus program to $75 billion a month in asset purchases in January after seeing the economy's recovery from recession gaining traction.

Exports to China struck a record high $13.2 billion in November. The huge, politically sensitive trade gap with the second-largest economy narrowed to $26.9 billion from $28.9 billion in October.

Critics say that Beijing keeps its yuan currency undervalued to boost exports, helping to maintain the largest two-way trade surplus with the U.S. In the first 11 months of the year, the gap stood at $293.9 billion, potentially on trend to top the record of $315.1 billion in 2012.

- Veronica Smith, AFP

Copyright Agence France-Presse, 2014

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