By Lucia Mutikani
WASHINGTON -- The U.S. trade deficit fell to an 11-month low in November as declining crude oil prices curbed the import bill, prompting economists to sharply raise their growth estimates for fourth-quarter growth.
The economy's resilience despite slowing global growth was also underscored by other data Wednesday showing private employers stepped up hiring last month.
%VIRTUAL-pullquote-The fundamentals for the U.S. are rock solid and the economy will grow quickly this year even if the rest of the world stumbles along.%"The fourth quarter is shaping up to be much better than we had anticipated," said Ryan Sweet, a senior economist at Moody's Analytics in West Chester, Pennsylvania. "The fundamentals for the U.S. are rock solid and the economy will grow quickly this year even if the rest of the world stumbles along."
The Commerce Department said the trade gap narrowed 7.7 percent to $39 billion, the smallest since December 2013.
The inflation-adjusted trade deficit fell to $47.8 billion from $50.1 billion in October, prompting economists to raise fourth-quarter gross domestic product estimates by as much as 0.8 percentage point to as high as a 3.5 percent annualized pace.
Before the report, many had believed trade would be a drag on growth in the final three months of 2014. Trade contributed 0.8 percentage point to the third quarter's robust 5 percent growth pace, which was the fastest in 11 years.
Lower gasoline prices and a tightening labor market are providing a tailwind to the economy.
The firming labor market was underscored by the ADP National Employment Report, which showed private payrolls increased 241,000 in December after rising 227,000 in November,
The report, jointly developed with Moody's Analytics, came ahead of the government's more comprehensive employment report Friday.
The data, together with expectations of monetary stimulus from the European Central Bank after weak inflation figures, helped U.S. stocks to snap a five-session losing streak. The dollar hit a nine-year high against the euro.
Prices for U.S. Treasury debt fell.
Imports dropped 2.2 percent to a nine-month low in November. The value of petroleum imports hit the lowest since August 2009, leaving the petroleum deficit near an 11-year low.
Reduced Dependence on Overseas Oil
A domestic energy boom has enabled the United States to reduce its dependence on foreign oil, easing pressure on the current account deficit. In November, the quantity of crude oil imports was the smallest since February 1994, while the average import oil price was the lowest in nearly four years.
Lower oil prices should help to temper the impact on the trade balance of non-petroleum imports, which are expected to surge because of firming domestic demand and a strong dollar.
Economists were little concerned by a 1 percent drop in exports in November, which was likely related to a labor dispute at the country's main ports on the West Coast.
That dispute has been cited by businesses as causing delays in the movement of goods.
"The falls in trade volumes may be linked to the ongoing West Coast dock labor dispute rather than the state of global and domestic demand," said Paul Dales, a senior U.S. economist at Capital Economics in London.
-With additional reporting by Richard Leong in New York.
By Lucia Mutikani