WASHINGTON: The US trade deficit in November receded from a 10-year high in the prior month, as imports fell by more than exports, according to a Wednesday (Feb 6) report that had been delayed by the government shutdown.
However, the trade gap is more than 10 per cent higher for the January-November period than it was in 2017, despite President Donald Trump's aggressive policies that have imposed punitive tariffs on hundreds of billions of dollars in goods, and sparked retaliation from US trading partners.
While economists had expected the deficit to subtract from growth in the final quarter of 2018, the latest data changes the picture.
The deficit in November fell to US$49.3 billion from US$55.7 billion in October, the Commerce Department said in the data released that was postponed more than a month.
That was well below the US$54 billion economists had expected, and attributed in part to falling oil prices.
Imports fell by US$7.9 billion due largely to big declines in consumer goods like cell phones and of industrial supplies like petroleum products.
Exports declined US$1.2 billion, due to declines in sales of industrial supplies and consumer goods, partially offset by a US$1 billion jump in civilian aircraft, the data showed.
Economists say the decline also reflects the retreat from the spike as businesses rushed to buy product in advance of the steep tariffs imposed on Chinese goods.
"The deficit fell more than expected, consistent with some of the earlier rise being due to accelerated imports ahead of threatened tariffs," Jim O'Sullivan of High Frequency Economics said in a research note.
He said he no longer saw a drag on growth in the fourth quarter.
Ian Shepherdson of Pantheon Macroeconomics said the impact would be less than expected.
He said "net trade is still likely to be a drag on Q4 GDP growth. But it is set to be much smaller than we previously thought, so the chance of a three per cent-plus GDP number has just risen sharply."
The deficit in goods trade with China fell to US$35.4 billion from US$38.2 billion in October, not seasonally adjusted, almost entirely due to the drop in imports.
Washington and Beijing have exchanged steep tariffs on more than US$360 billion in total two-way trade.