By Lucia Mutikani
WASHINGTON – The US trade deficit unexpectedly narrowed in November as imports of consumer goods fell to a one-year low amid slowing domestic demand, a trend that, if it persists in December, could result in trade having no impact on economic growth in the fourth quarter.
The report from the Commerce Department on Tuesday also showed exports declined in November amid cooling demand overseas. Demand is slowing both in the United States and abroad following hefty interest rate increases by global central banks since 2022 to tackle rampant inflation.
The Federal Reserve’s rate hiking cycle has likely ended, with financial markets expecting the US central bank to start lowering borrowing costs as soon as March.
“The weakness of both exports and imports in November suggests that weaker growth overseas is now being matched by a softening in domestic demand too,” said Andrew Hunter, deputy chief US economist at Capital Economics.
The trade deficit contracted 2.0 percent to $63.2 billion, the Commerce Department’s Census Bureau said. Data for October was revised slightly to show the trade gap widening to $64.5 billion instead of the previously reported $64.3 billion.
Economists polled by Reuters had forecast the trade deficit would rise to $65.0 billion in November.
Imports declined 1.9 percent, or $6.1 billion, to $316.9 billion. Goods imports dropped 2.3 percent to $257.4 billion.
Imports of consumer goods fell $4.1 billion to the lowest level since November 2022, led by a $1.9 billion decrease in cell phones and other household goods.
There were also declines in imports of pharmaceutical preparations as well as industrial supplies and materials, which include petroleum products. But crude oil imports increased $1.5 billion. Capital goods imports decreased $0.7 billion, pulled down by declines in drilling and oilfield equipment, suggesting weak business spending on equipment persisted in the fourth quarter.
Exports decreased 1.9 percent, or $4.8 billion, to $253.7 billion. Goods exports dropped $5.4 billion to $168.0 billion, with industrial supplies and materials falling $3.6 billion as crude oil shipments slipped $1.0 billion. The decline was mostly because of lower oil prices.
Exports of those goods were also weighed down by decreases in non-monetary gold and organic chemicals.
Exports of motor vehicles, parts and engines also fell, likely as production lagged in the aftermath of strikes by the United Auto Workers union.
Consumer goods dropped to the lowest level since December 2022. But exports of capital goods were the highest on record.
Stocks on Wall Street were trading lower, while the dollar was higher versus a basket of currencies. US Treasury prices rose.
