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Economy in Brief

U.S. Trade Deficit Narrows Sharply With Fewer Imports
by Tom Moeller  January 7, 2015

The U.S. foreign trade deficit in goods and services narrowed to $39.0 billion in November from $42.2 billion in October, revised from $43.4 billion. It was the smallest deficit since December 2013 and compared to $41.9 billion expected in the Action Economics Forecast Survey. Exports fell 1.0% (+0.7% y/y), after October's 1.6% increase. That shortfall was outpaced by a 2.2% drop (+1.9% y/y) in imports. Nonpetroleum imports fell 1.2% (+5.9% y/y) while petroleum imports were off 11.9% (-20.0% y/y). This decline reflected a drop in crude petroleum costs to $82.95 per barrel (-12.4% y/y) as well as a 15.7% fall in the quantity of crude oil imports (-11.2% y/y). In constant dollars, the merchandise trade deficit declined to $47.8 billion, its least since July. The real value of goods exports slipped 0.4% (+2.6% y/y) and the real value of merchandise imports declined 1.6% (+3.5% y/y).

The decline in real merchandise exports reflected a 4.7% drop in real capital goods exports (-0.2% y/y) as well as a 3.6% decline (+0.2% y/y) in price-adjusted auto exports. Real nonauto consumer goods exports fell 2.4% (+6.4% y/y) but constant dollar industrial supplies & materials exports jumped 4.8% (5.4% y/y). Services exports fell 0.2% (+2.5% y/y) as travel exports slipped 0.2% (+1.7% y/y). The 1.6% decline in real imports was powered by a 6.1% drop (-7.5% y/y) in constant dollar petroleum imports. Real imports of nonpetroleum products fell 0.9% (+5.4% y/y). Real industrial supplies & materials imports fell 5.0% (-1.7% y/y) while inflation-adjusted foods, feeds & beverage imports were off 4.5% (+3.2% y/y). Real auto imports declined 2.6% (+2.2% y/y) and constant dollar capital goods imports were off 1.4% (+6.0% y/y). Offsetting these declines was 3.4% rise (7.3% y/y) in real exports of nonauto consumer goods. Services imports notched 0.1% lower (+2.5% y/y) as travel imports fell 0.7% (+6.0% y/y).

By country, the deficit in goods with China eased to $29.9 billion, its least in six months. Imports from China were up 5.0% y/y but exports fell 6.7% y/y. The trade deficit with Japan also lessened to $5.5 billion. Exports to Japan declined 13.2% y/y while imports were off 8.7% y/y. The trade deficit with the European Union eased to $11.8 billion as exports declined 2.7% y/y but imports rose 2.6% y/y.

The international trade data can be found in Haver's USECON database. Detailed figures are available in the USINT database. The expectations figures are from the Action Economics Forecast Survey, which is carried in the AS1REPNA.

The minutes to the latest FOMC meeting can be found here.

Foreign Trade (Current Dollars) Nov Oct Sep Y/Y 2013 2012 2011
U.S. Trade Deficit $39.0 bil. $42.2 bil. $43.6 bil $36.0 bil.
$476.4 bil. $537.6 bil. $548.6 bil.
Exports (%) -1.0 1.6 -1.8 0.7 2.9 4.2 14.8
Imports -2.2 0.7 0.0 1.9 0.1 2.9 13.9
  Petroleum -11.9 -0.7 -3.3 -20.0 -11.0 -5.5 30.7
  Nonpetroleum goods -1.2 1.0 0.4 5.9 2.0 5.2 12.1
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