November Trade Gap Narrows but Longer-term Trends Remain Worrisome

Alan Tonelson |

The U.S. goods and services trade deficit fell by 4.95 percent in November to the second lowest monthly total of the year but the drop's magnitude was boosted by a significant upward revision for October's total – the second big monthly upgrade in a row. Overall exports, goods exports, and goods imports sunk to their worst monthly levels in nearly four and five years, respectively, and the huge chronic shortfalls in manufacturing and China merchandise trade retreated sequentially. Yet both are still on track for new annual records, and monthly high tech goods trade registered its third highest deficit ever. Goods imports from Canada are now at five-plus-year bottom. And even though petroleum imports and the oil trade shortfall increased on month, both remained near lows set in 2003 and 1999, respectively.

Here are selected highlights of the latest monthly (November) trade balance figures released this morning by the Census Bureau:

>The combined U.S. goods and services trade deficit decreased by 4.95 percent on month in November, to $42.37 billion – the second lowest total of the year after February’s weather- and ports-strike-affected $38.54 billion.

>But the improvement was magnified by a 1.57 percent upward revision in the October overall deficit – from $43.89 billion to $44.58 billion. This revision represented the second significant monthly upgrade in a row.

>U.S. combined exports and imports declined sequentially. The former fell from a downwardly revised $183.78 billion to $182.21 billion, and the latter from an upwardly revised $228.36 billion to $224.59 billion.

>In historic perspective, however, the export fall-off was more significant. Combined goods and services exports in November hit their lowest level since January, 2012, and goods exports have not been this weak since February, 2011.

>November’s overall import total was the lowest since that winter- and labor-affected February’s $224.43 billion. The merchandise import level of $183.48 billion, however, was the weakest since February, 2011’s $176.72 billion.

>America’s huge and longstanding shortfalls in manufacturing and China trade both were down sequentially in November, but both also still seem certain to hit new annual records.

>The manufacturing trade deficit fell to $71.13 billion from October’s all-time high $76.74 billion. Yet despite this 7.31 percent decrease, this trade gap is running 13.89 percent ahead of last year’s record pace.

>From October to November, manufactures exports sank by 7.43 percent, to $88.02 billion, while the much larger amount of imports dropped by 7.38 percent, to $159.15 billion.

>Through November, U.S. manufactures exports are down 6.39 percent year-on-year, while imports are up 1.30 percent.

>The manufacturing-dominated goods trade deficit with China declined 5.19 percent on month in November, from $32.97 billion to $31.26 billion. U.S. merchandise exports to the still strongly growing PRC economy were down 6.18 percent, from $11.38 billion to $10.68 billion. America’s merchandise imports from China on month were off 5.45 percent, from $44.36 billion to $41.94 billion.

>Nonetheless, the bilateral trade imbalance through November is running 7.23 percent ahead of last year’s all-time high. And America’s merchandise exports to China this year could fall on an annual basis for the first time since 2009.

>In another noteworthy development, the high tech goods trade deficit in November rebounded to 2015 high of $11.44 billion – up 9.79 percent from October’s $10.42 billion figure. This total also represented the third worst monthly high tech goods deficit ever, and could propel this imbalance to its second highest annual level on record.

>High tech goods exports decreased by 9.40 percent on month, to $28.10 billion, while imports fell by only 4.57 percent, to $39.53 billion.

>Another multi-year low revealed in the November trade figures came in U.S. goods imports from Canada. The $22.73 billion figure hasn’t been this weak since July, 2010.

>The new report also cast further doubt on President Obama’s trade strategy, as the goods deficit with Korea worsened by 4.84 percent. Washington and Seoul signed a free trade agreement in 2012, and this KORUS deal was the model for the much larger Trans-Pacific Partnership (TPP) completed last year. But the trade gap with Korea this year is currently 14.50 percent greater than year’s January-November total and looks certain to set its third annual record since the bilateral pact was concluded.

>On a monthly basis, the U.S. merchandise trade deficit with Korea has more than quadrupled since the agreement went into effect in March, 2012.

>The improvement in the overall November U.S. trade balance contrasted with a 19.58 percent sequential increase in the petroleum trade gap – from $4.48 billion to $5.36 billion. Nonetheless, that figure still represents the second lowest monthly total since June, 1999.

>Similarly, although petroleum imports increased by 5.12 percent sequentially, to $12.62 billion, that total was the second lowest since December, 2003.

>Also, despite the monthly shrinkage, the U.S. combined goods and services trade deficit is 5.45 percent higher on a January-November basis than the 2014 figure.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to:


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