2nd Consecutive Dip for U.S. Trade Deficit
The U.S. trade deficit narrowed in November for a second straight month as slowing business investment and a decline in demand for autos led to a further drop in imports, the government reported Friday.
The trade deficit in goods and services narrowed to $33 billion for the month from $33.6 billion during October, the Commerce Department said. Imports fell 1.1% after a 1.4% October decrease, the biggest two-month drop on record.
Consumer confidence fell in January to its lowest point in 3 1/2 years, a report from the University of Michigan showed. That suggests slower consumer spending may curtail imports even more.
“We expect the deficit will continue to narrow in the next six months as weakening U.S. consumption and investment continues to undermine demand for imports,” said Chris Low, chief economist at First Tennessee Capital Markets in New York.
The drop in November imports reflected lower shipments of computers, telecommunication equipment and autos, and a fall in the price of crude oil. It exceeded a decline in exports and resulted in the first back-to-back narrowing of the trade deficit since May-July 1997.
Exports decreased 0.8%, the third monthly drop, as shipments of computer accessories, aircraft and semiconductors fell.
The index of consumer sentiment, meanwhile, fell to 93.6--the lowest since June 1996--from December’s 98.4.
“The economy is considerably softer than it was, and the downside risks are greater than they have been in some time,” said Federal Reserve Bank of Richmond President Alfred Broaddus in a speech Friday. “But at least for now, there is little evidence of a sharp across-the-board decline in economic activity,” he said.
Exports have been weak over the past year because the strength of the U.S. dollar makes U.S.-made goods more expensive abroad.
Before October, imports had risen for 19 out of 21 months. Higher oil prices and growing consumer demand in the first half of 2000 helped propel the rise in imports, resulting in a ballooning trade shortfall.
Through November, the trade deficit totaled $335.9 billion this year, up from $239.3 billion through November 1999, according to the government’s statistics. The November deficit puts the annual shortfall on track to reach $372 billion, compared with the record $265 billion in 1999.
The trade deficit with Japan narrowed to $6.8 billion in November from $8.4 billion during October, the Commerce Department said. The shortfall with China narrowed to $7.6 billion for the month from $9.1 billion. The November decline was the first in seven months, Commerce officials said. The deficit with OPEC narrowed to $3.8 billion from $4.3 billion.
The deficits with Mexico and western Europe also narrowed while the deficit with Canada, the largest U.S. trading partner, rose to a record $4.7 billion.
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U.S. Trade Deficit
The overall gap continues to reflect a deficit in the trade of goods and a surplus in services. In billions of dollars:
*
November deficit: -$33.0
Source: Commerce Department
