U.S. Trade Deficit Widened Unexpectedly to $36.4 billion in November

The nation experienced a setback on the trade front in November as the U.S. trade deficit increased 9.7% to $36.4 billion, the Commerce Department announced Tuesday. It was the second straight monthly increase for the trade deficit, pushing it to its highest level since January 2009, and it occurred despite the fact that exports rose for the seventh consecutive month. For the month, exports increased by $1.2 billion or 0.9% to $138.2 billion, but imports rose by $4.4 billion or 2.5% to $174.6 billion.%%DynaPub-Enhancement class="enhancement contentType-HTML Content fragmentId-1 payloadId-61603 alignment-right size-small"%% Economists surveyed by Bloomberg News had expected the trade deficit to total $35.0 billion in November. The revised trade deficit for October was $33.2 billion, up from the previously estimated $32.9 billion, but still down from $35.7 billion in September.

Trade Deficit Down Substantially From a Year Ago

For the first 11 months of 2009, the trade deficit totalled $340.6 billion, down substantially from the $654.1 billion total for the same period in 2008.

In November, oil imports increased to $17.8 billion from $17.4 billion in October, with the average price of a barrel of crude rising to $72.54 from $67.39.

The nation incurred trade deficits in November with a number of key trading partners: China, $20.2 billion, down from $22.7 billion in October; European Union, $6.4 billion, up from $4.9 billion; OPEC, $6.1 billion, up from $5.8 billion; Japan, $5.4 billion, up from $4.4 billion; Mexico, $5.1 billion, up from $4.6 billion; Nigeria, $2.1 billion, up from $1.4 billion; Venezuela, $1.6 billion, down from $1.7 billion; Canada, $1.4 billion, down from $2.1 billion; Taiwan, $900 million, up from $700 million; and S. Korea, $700 million, up from $500 million.

The U.S. registered trade surpluses in November with: Hong Kong, $1.4 billion, down from $1.6 billion in October; Australia, $1.0 billion, down from $1.3 billion; Singapore, $700 million, down from $900 million; and Egypt, $200 million, down from $400 million.

Economists consider it healthier for a nation to operate with a trade surplus as opposed to a trade deficit, as it usually implies that a nation's goods are competitive on the world stage, its citizens are not consuming too much, and that it's amassing capital for future investment and economic goals.

Economic Analysis

In general, a tepid November trade deficit report. On the upside, exports continued to rise, aided by the weak dollar. However, the rise in the average price of imported oil led to a larger-than-expected trade deficit: The U.S. used less oil in November, but the $5 per barrel increase led to a higher overall imported oil bill. That high crude oil price offset import declines in industrial supplies and materials, capital goods, and foods and feeds.
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