WASHINGTON: The US trade deficit fell for the first time in six months in November as cheaper oil and higher domestic petroleum production helped to curb the country’s import bill, leading economists to boost their economic growth estimates for the fourth quarter.
The Commerce Department’s report on Wednesday also showed a drop in imports of consumer goods such as cellphones and other household goods. The decrease in imports followed five straight monthly increases, likely as businesses stocked up amid an escalating trade war between the United States and China.
“It is possible that some of the consumer goods imports were brought into the country in greater numbers to build a stockpile before the import tariffs took effect or grew even worse,” said Chris Rupkey, chief economist at MUFG in New York. “The good news is this will temporarily boost real GDP in the fourth quarter.”
The trade deficit dropped 11.5 per cent to $49.3 billion in November. It had increased for five straight months. Economists polled by Reuters had forecast it would fall to $54.0 billion in November.
The release of the report was delayed by a recently ended five-week partial shutdown of the federal government.
The politically sensitive goods trade deficit with China fell to $37.9 billion in November from $43.1 billion in October.
The overall trade deficit has remained elevated despite the Trump administration’s “America First” policies, which have led Washington to impose tariffs on a range of imported goods from China, sparking a trade war with Beijing.
President Donald Trump has long railed against China’s trade surplus with the United States, and accuses Beijing of not playing fairly on trade. The United States has also slapped duties on imported steel, aluminium, solar panels and washing machines.
The dollar rose against a basket of currencies, while stocks on Wall Street were trading lower after disappointing forecasts from video game makers. US Treasury yields mostly fell.
When adjusted for inflation, the goods trade deficit decreased $7.5 billion to $80.8 billion in November.
The drop in the so-called real trade deficit led some economists to raise their fourth-quarter GDP growth forecasts by as much as six-tenths of a percentage point to as high as a 3.0 per cent annualised rate.
“We had thought that trade would subtract more than half a point from GDP growth in the fourth quarter, but now it looks like trade will be close to neutral for fourth-quarter growth,” said Daniel Silver, an economist at JPMorgan in New York. — Reuters
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