U.S. Trade Deficit Narrowed Markedly in November

The U.S. foreign trade deficit in goods and services (BOP basis) fell markedly to $61.5 billion in November from a downwardly revised $77.8 billion in October (initially -$78.2 billion). This is the smallest monthly deficit since September 2020. The Action Economic Forecast Survey had looked for the deficit to narrow to $68.2 billion. Both exports and imports fell in November. Exports fell 2.0% m/m (+10.4% y/y), their third consecutive monthly decline. Imports plummeted 6.4% m/m (+2.4% y/y), their first monthly decline in three months.

The real (inflation-adjusted) trade balance for goods also narrowed markedly to $97.1 billion (2012$) in November from $113.1 billion in October. The narrowing of the trade balance (net exports) in Q3 was a major contributor to overall real GDP growth, adding 2.9%-points. However, even with the significant narrowing of the deficit in November, the Oct/Nov average puts the trade deficit on track to widen in Q4 from Q3. This implies that net exports will turn from a contributor to growth to a drag on growth in the fourth quarter.

The customs value goods trade deficit narrowed to $82.9 billion in November from $98.6 billion in October. Today’s figure is in line with the advance estimate of an $83.3 billion November deficit released last week. Exports of goods (customs value) fell 2.8% m/m in November on top of a 1.9% m/m decline in October and a 2.2% monthly fall in September. Exports of industrial supplies fell 5.2% m/m; food exports declined 4.2% m/m; and exports of capital goods excluding autos slumped 2.5% m/m. By contrast, exports of nonfood consumer goods excluding autos rose 4.5% m/m and auto exports were up 1.9% m/m.

Imports of goods (customs value) plummeted 7.6% m/m in November, the first decline in three months, following a 1.0% m/m increase in October. Monthly declines were widely spread with every major category experiencing a decrease. Imports of nonfood consumer goods excluding autos fell 12.8% m/m in November, their largest monthly decline in the history of the series dating back to 1986. Auto imports declined 9.2% m/m and “other” imports dropped 7.9% m/m. Petroleum imports declined 3.6% m/m while nonpetroleum imports plunged 7.9% m/m. This was their second largest monthly decline in the history of the series dating back to 1989, exceeded only by 10.4% monthly decline in April 2020.

The services trade surplus increased to $22.5 billion in November from $21.6 in October. Total services exports edged up 0.3% m/m (+13.2% y/y). Travel exports fell 1.6% m/m in November after an outsized 6.3% m/m jump in October. Exports of personal, cultural and recreational services increased 2.1% m/m on top of a 3.3% monthly gain in October. Charges for the use of intellectual property rose 0.7% m/m following a 1.1% m/m gain in October. Imports of services fell 1.3% m/m (+14.0% y/y), their second consecutive monthly decline. Transportation services imports fell 5.4% m/m while travel imports declined 3.2% m/m. By contrast, imports of intellectual property rights increased 4.5% m/m in November, their sixth consecutive monthly gain.

The goods trade deficit with China narrowed to a seasonally adjusted $20.4 billion in November from $26.1 billion in October. This was the narrowest monthly deficit with China since March 2020 and reflected a 14.7% m/m plunge in U.S. imports from China. The trade deficit with Japan narrowed to $5.6 billion in November from $6.4 billion in October. The goods trade deficit with the European Union narrowed to $19.5 billion in November from a series high $23.1 billion in October. These figures date back to January 2009.

The international trade data can be found in Haver’s USECON database. Detailed figures on international trade are available in the USINT database. The expectations figures are from the Action Economics Forecast Survey in AS1REPNA database.