The U.S. trade deficit fell in November to the lowest level in almost a year, thanks to the country's swiftly slackening thirst for foreign oil.
The deficit — imports exceeding exports — narrowed to $39 billion during the month, down 7.7% from a revised October deficit of $42.2 billion, the Commerce Department reported Wednesday.
U.S. exports slipped 1% to $196.4 billion amid lower sales of commercial airliners.
Primarily because of oil, imports posted a steeper drop of 2.2% to $235.4 billion. The volume of crude imported in November hit its lowest level since 1994, while the average price hit a two-year low of $82.95 a barrel. A simultaneous boom in domestic oil production has also cut the country's reliance on imported oil.
Economists predict that the oil market will continue to reduce the U.S. trade deficit and potentially bolster the overall economy. To be sure, a lower bill for foreign oil is likely to be offset somewhat by a stronger dollar, which makes U.S. goods more expensive in overseas markets, and economic weakness in such key export markets as Europe and Japan.
"The trade gap will continue to shrink apace until the oil import tab stops falling like a rock," said Patrick Newport, an economist at Global Insight.
Some analysts revised their forecast for overall growth in the October-December quarter higher based on the better-than-expected November trade report.
Ian Shepherdson, chief economist at Pantheon Macroeconomics, said trade would be less of a drag in the fourth quarter than he had previously thought. He now projects overall economic growth of 2.25% in the October-December quarter. Other economists are more optimistic and estimate growth of 3% or higher in the fourth quarter.
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% above the same period in 2013.
The politically sensitive trade deficit with China dropped 8% to $29.9 billion in November 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.
For the first 11 months of 2014, U.S. energy exports are up 9.6% compared with the same period in 2013, putting them on track to hit a record even with the recent fall in prices.