WASHINGTON (MarketWatch) — The nation’s trade deficit sank 5% in November 2015 to the smallest amount in a year, but not because the economy is much improved: U.S. exports fell slightly, hitting the lowest level since the start of 2012, and imports dropped even faster.
The U.S. trade gap declined to a seasonally adjusted $42.4 billion from $44.6 billion in October, fresh government data show. Economists polled by MarketWatch had predicted the deficit would total $43.8 billion
U.S. exports slipped 0.9% to $182.2 billion in November. Imports fell a sharper 1.7% to $224.6 billion.
The lower deficit in November was largely the result of falling imports of electronic goods as well as lower prices for crude oil and other commodities such as steel used in industrial supplies.
U.S. retailers stocked up on electronic goods such as cell phones, computers and televisions in October ahead of the holiday season. Orders for these goods fell off sharply in November.
At the same time, the price the U.S. paid for imported oil fell in November to the lowest level since 2009. The total value of crude oil imports declined despite in increase in the number of barrels purchased.
Cheap oil prices worldwide and a surge in domestic production has turned around the U.S. relationship with the OPEC oil-producing nations. The U.S. set another record trade surplus with OPEC in November at $1.7 billion.
Imports from Canada, another major supplier of oil, fell to the lowest level in five years.
The price of oil isn’t the only thing falling. The cost of many major commodities have tumbled, causing U.S. imports of industrial supplies and materials to fall in November to the lowest level in more than six years.
The downturn in the U.S. deficit in November, however, is unlikely to last, economists say. They predict the trade gap will rise again in the final month of 2015 and that the trade deficit will restrain growth in the fourth quarter.
The steadily growing U.S. economy has been unable to speed up in the past few years largely because of a weakened trade position. A deteriorated trade picture has reduced growth in five of the past seven quarters.
What’s more, the weakness in exports remains a longer-term problem. U.S. exports are 4.6% lower through the first 11 months of 2015 compared with the same period a year earlier.
Exports have shrunk owing to weak global growth and a strong dollar that’s made U.S. goods more expensive in other countries. They are unlikely to snap back until the global economy rebounds and the dollar comes off recent multiyear highs.
“Even though the pace of dollar appreciation has slowed quite sharply over the past six months, that drag will persist for some time,” said Paul Ashworth, chief U.S. economist at Capital Economics.
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