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US goods trade deficit declines to smallest in three years
[WASHINGTON] The US merchandise-trade deficit unexpectedly narrowed for a third month in November to the smallest shortfall in three years as exports increased and imports declined, the latest sign that economic growth is holding up at the end of the year.
The gap decreased to US$63.2 billion from US$66.8 billion the prior month, according to Commerce Department data released Monday that compared with forecasts for a widening to US$68.7 billion. Exports rose 0.7 per cent while imports dropped 1.3 per cent.
The further narrowing of the trade deficit will help give a boost to growth in the fourth quarter. Imports were a slight drag on gross domestic product growth in the two prior periods, while exports of goods provided a slight tailwind in the third quarter after weighing in the prior three-month period.
The report comes after the US and China agreed this month to the first phase of a trade agreement in which Washington will ease tariffs, and at least temporarily calm fears of an escalating trade war between the world's two largest economies. Chinese Vice Premier Liu He is set to lead a delegation to Washington Saturday to sign the deal, the South China Morning Post reported Monday.
Exports got a boost from a 3.4 per cent increase for automotive products and 2.6 per cent gain for consumer goods, while imports decreased across industrial supplies, consumer products and capital goods.
The report also showed retail inventories dropped 0.7 per cent in the month as wholesale inventories were little changed. Analysts look to these numbers to adjust estimates for economic growth during the quarter.
Exports and imports of goods account for about three-fourths of America's total trade; the US typically runs a deficit in merchandise and a surplus in services.
Monday's figures cover goods only. Commerce will release full international trade data on Jan 7, including services and more details on merchandise shipments.