U.S. trade deficit narrows in November on sharp fall in imports

Trade deficit of the U.S. narrowed more than anticipated in November. The deficit came in at USD 49.3 billion, from an upwardly revised USD 55.7 billion, surpassing consensus expectations of USD 54 billion. The narrowing of deficit was mainly due to a fall in the goods deficit. The surplus on services trade was little changed. Within goods trade, most of the fall came from an unexpected, sharp decline in imports, while exports continued to trend lower. The deceleration of U.S. exports growth can be linked to slower momentum in global growth and demand. In the meantime, sudden fall in U.S. imports is more difficult to explain, as it is the first fall since April 2018.

Delving into details, the sharp fall in goods imports was driven by industrial supplies and consumer goods excluding autos. Meanwhile, capital goods imports rose just modestly. On the exports side, a fall was seen in consumer goods, autos, and food & beverage products. On a country-wise basis, the U.S.’s trade deficit with most major trading partners narrowed in November – the deficit with China dropped by USD 5.2 billion, mainly on lower imports; the deficit with EU also narrowed, by USD 2.5 billion, on lower imports.

“With regard to our GDP tracking, data received this morning were stronger than we had expected, leading us to revise our net exports estimate for Q2 2018 higher. This was partly offset by a slight downward revision to our equipment investment tracking on account of weaker imports of capital goods and other equipment. In all, our tracking estimate increased by 0.5pp, to 2.8 percent q/q saar”, said Barclays in a research report.

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