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Economy in Brief

U.S. Trade Deficit Narrowed Unexpectedly
by Tom Moeller January 10, 2007

The U.S. foreign trade deficit narrowed unexpectedly in November to $58.2B from a little revised $58.8B during October. The deficit was the shallowest since July of last year and compared to Consensus expectations for a deficit of $60.0B.

The value of petroleum product imports fell 9.3% (-11.2% y/y) as the per barrel cost of crude oil petroleum imports fell 5.8% m/m to $52.25 and the quantity of crude oil imports fell 0.8% (-4.7% y/y).

Imports of nonpetroleum products rose 0.3% (7.8% y/y) after two months of decline. Capital goods imports rose 0.9% (10.7% y/y) and imports of nonauto consumer goods surged 2.3% (15.0% y/y), the strongest monthly gain since June. Imports of advanced technology products rose 0.4% (14.2% y/y).

Total exports rose a strong 0.9% goosed by a 1.9% (13.0% y/y) rise in capital goods exports. Exports of complete civilian aircraft jumped 15.7% (36.9% y/y) and aircraft parts & engines exports also rose a strong 7.9% (19.2% y/y). Computer exports slipped 6.3% (+16.1% y/y) and exports of nonauto consumer goods rose 1.4% (13.5% y/y) after October's 3.7% jump.

Service exports jumped another 1.4% (9.8% y/y) as travel exports surged 2.6% (11.8% y/y) and passenger fares jumped 2.9% (6.5% y/y). Imports of services also rose a strong 0.9% (9.0% y/y) reflecting a 2.7% (12.5% y/y) rise in travel and a 3.9% jump in passenger fares (6.0% y/y).

The U.S. trade deficit in goods with China narrowed slightly to $22.9B in November ($201.5B in 2005) as imports fell s sharp 5.2% (+23.9% y/y). The balance of goods trade with the newly industrialized Asian also narrowed to a deficit $0.4B (-$15.8B in 2005), the smallest since March of last year, as exports surged 6.5% (33.2% y/y) and imports fell 6.2% (+0.8% y/y).

The trade deficit with Europe deepened slightly m/m to $9.5B as US exports fell 1.1% (+14.6% y/y) and imports slipped 0.6% (+1.4%% y/y).

China's Strategic Petroleum Reserve: A Drop in the Bucket from the Federal Reserve Bank of St. Louis can be found here.

Foreign Trade  November October Y/Y 2005 2004 2003
U.S. Trade Deficit $58.2B $58.8B $64.0B
$716.7B $611.3B $494.9B
Exports - Goods & Services 0.9% 0.3% 13.4% 10.7% 13.4% 4.2%
Imports - Goods & Services 0.3% -2.7% 5.2% 13.0% 16.7% 8.3%
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