Washington, DC, January 10, 2007--The trade deficit narrowed again in November, adding support to the argument of some economists that the massive imbalance has finally peaked.
The trade gap narrowed by 1.0% in November to $58.2 billion, the Commerce Department said Wednesday. This is third straight month with a lower deficit, bringing the trade gap to its lowest level since July 2005.
In November, exports rose to a new record level while imports increased at a smaller pace.
The narrowing of the trade gap surprised Wall Street economists, who had expected the November trade deficit to widen to about $59.8 billion, according to a survey conducted by MarketWatch. See Economic Calendar.
The deficit in October was revised down slightly to $58.8 billion from $58.9 billion.
The improvement in the deficit will boost fourth-quarter gross domestic product, economists said. The only debate is the size of the impact.
Despite the improvements over the last three months, the year-to-date deficit is up 7.5% to $701.61 billion, meaning the deficit for 2006 will surpass the record $716.7 billion deficit set last year.
The lower cost of imported oil is part of the story of the improved deficit.
The dollar value of imported petroleum fell by 9.5% to $15.6 billion. This is the lowest import value since February. The quantity of energy-related petroleum imports fell by 4.0% to 299.4 million barrels.
The nation imported an average of 10.0 million barrels of crude oil a day in November. The average price fell by $3.22 to $52.25 per barrel, the lowest price since January.
The U.S. trade deficit with China widened to $22.9 billion in November from $18.5 billion in the same month last year. But the gap was lower than the record $24.4 billion deficit set in October. The trade gap with China rose to $213.5 billion in the first 11 months of the year, up from $185.3 billion in the same period last year.
Imports from China fell 5.2% to $27.8 billion, while exports to China fell 1.7% to $4.9 billion.
