US trade deficit hits 11-month low of $39 billion
WASHINGTON — The U.S. trade deficit fell in November to the lowest level in 11 months as crude oil imports dropped to a two-decade low.
The trade deficit narrowed to $39 billion in November, down 7.7 percent from a revised October deficit of $42.2 billion, the Commerce Department reported Wednesday. U.S. exports slipped 1 percent to $196.4 billion, with sales of commercial airliners falling.
Imports dropped even faster, falling 2.2 percent to $235.4 billion. That was primarily a reflection of foreign oil declines. The volume of crude imported in November hit its lowest level since 1994, while the average price dropped to a two-year low.
The U.S. trade deficit is being helped by falling global oil prices and a boom in U.S. energy production, which has lessened America's reliance on imports.
The November deficit was the lowest since a trade gap of $37.4 billion in December 2013. Through the first 11 months of 2014, the deficit is running 5.1 percent above the same period in 2013.
The smaller-than-expected deficit for November caused some economists to boost their growth forecasts for the final three months of the year.
Ian Shepherdson, chief economist at Pantheon Macroeconomics, said trade should be less of a drag on the economy than he had previously expected and is now projecting overall economic growth of 2.25 percent in the October-December quarter. Other economists are more optimistic and estimating growth of 3 percent in the fourth quarter.
Many economists believe the trade deficit will keep rising in 2015, reflecting an expanding U.S. economy that will be importing more foreign products than U.S. producers will be selling overseas. American manufacturers are grappling with weakness in a number of major export markets such as Europe and Japan, as well as a strengthening U.S. dollar that makes American goods more expensive for foreign consumers.
A rising trade deficit acts as a drag on economic growth, but economists are still forecasting that overall growth this year will be stronger than in 2014.
In November, the politically sensitive trade deficit with China dropped 8 percent to $29.9 billion but remained on track to set a new all-time high for the year. America's deficit with China is the largest for any country. It has added to pressure on Congress and the Obama administration to take tougher actions against what critics see as unfair Chinese trade practices such as the country's manipulation of its currency to gain trade advantages over American companies.
The widening trade gap with China comes at a time when the Obama administration hopes to finally get Congress to approve the fast-track authority it needs to wrap up a major 12-nation trade agreement with Pacific Rim countries known as the Trans-Pacific Partnership.
The administration sees the trade deal as one of the areas where President Barack Obama may be able to find common ground with Republicans who took control of the Senate this week and now control both chambers of Congress.
The U.S. deficit with the European Union dropped 7.4 percent to $11.8 billion in November as imports from that region fell more than U.S. exports. There is concern that an economic slowdown in Europe will dampen U.S. export sales.
For the first 11 months of 2014, U.S. energy exports are up 9.6 percent compared with the same period in 2013, putting them on track to hit a record even with the recent fall in prices.