Why the U.S. Trade Deficit Unexpectedly Narrowed
Merchandise imports remain elevated, but U.S. exports of services climbed in November to a record $85.7 billion.
The U.S. trade deficit unexpectedly narrowed in November, driven by a pickup in services exports and a slight decline in imports of merchandise.
The deficit in goods and services trade shrank 2 percent from the prior month, to $63.2 billion, Commerce Department data showed Tuesday. The median estimate in a Bloomberg survey of economists called for a $64.9 billion gap.
The value of imports and exports each decreased 1.9 percent. The figures aren’t adjusted for inflation.
Despite the November decline in the deficit, merchandise imports remain elevated against a backdrop of resilient consumer spending. However, U.S. exports of services climbed for a fourth month, to a record $85.7 billion in a broad advance.
On an inflation-adjusted basis, the merchandise trade deficit shrank to $84.8 billion in November, the smallest in three months. Prior to the current report, the Federal Reserve Bank of Atlanta’s GDPNow forecast showed trade subtracting 0.23 percentage point from fourth-quarter growth.
The drop in goods imports reflected decreases in industrial supplies, consumer goods, and capital equipment. U.S. exports were restrained by decreases in shipments of vehicles, industrial supplies, and consumer goods.
Digging Deeper
- Travel exports—spending by visitors to the U.S.—rose 1.4 percent after falling in October.
- Travel imports—a measure of Americans traveling abroad—climbed 2.7 percent, to a record high.
- The U.S. merchandise-trade deficit with China narrowed to the smallest level in a year. The value of goods imported from China declined more than 11 percent, to the lowest since March 2020.
- The goods shortfall with Mexico increased to the largest on record.
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