U.S. Trade Deficit Narrows To Smallest In Eleven Months In November

(RTTNews) - Reflecting a notable decrease in the value of imports, the Commerce Department released a report on Wednesday showing that the U.S. trade deficit narrowed by more than expected in the month of November.

The Commerce Department said the trade deficit narrowed to $39.0 billion in November from a revised $42.2 billion in October. The trade deficit in November reflected the smallest since December of 2013.

Economists had expected the deficit to shrink to $41.5 billion from the $43.4 billion originally reported for the previous month.

The narrower than expected deficit was partly due to a drop in the value of imports, which tumbled 2.2 percent to $235.4 billion in November from $240.6 billion in October.

A sharp pullback in oil prices contributed to the decrease in the value of imports along with a steep drop in the volume of oil imports.

Paul Dales, Senior U.S. Economist at Capital Economics, predicted the more recent drop in oil prices will further reduce the trade deficit to a five-year low of $34 billion in the coming months.

Meanwhile, the Commerce Department also said the value of exports fell by 1 percent to $196.4 billion in November from $198.3 billion in October.

The drop in the value of exports reflected a notable decrease in exports of capital goods, including civilian aircraft, as well as declines in exports of autos and consumer goods.

"Bottom line, while Q4 GDP estimates may get raised a hair by the lower than expected trade deficit, the internals were soft, particularly on the export side," said Peter Boockvar, managing director at the Lindsey Group.

The Commerce Department said the goods deficit narrowed to $58.3 billion in November from $61.6 billion in October, while the services surplus edged down to $19.3 billion from $19.4 billion.

The report also showed that the U.S. trade deficit with China widened to $29.8 billion in November from $29.6 billion in October.