The gap shrank more than forecast to $40.4 billion, the smallest since November 2003, from a revised $56.7 billion in October, the Commerce Department said today in Washington. Americans bought 12 percent fewer goods and services from overseas, sending imports to the lowest level in three years.
World trade is likely to contract as commodity prices fall and the credit crunch causes consumers and businesses worldwide to pare spending, deepening the economic slump. President-elect Barack Obama faces growing fissures with trading partners as U.S. steel and textile companies seek to slow imports while automakers get government loans to avoid bankruptcy.
After eliminating the effect of prices, which are the numbers used when calculating gross domestic product, the deficit dropped to $39.5 billion from $45.6 billion in October. By subtracting less from growth, the improvement may prompt some economists to boost GDP forecasts for last quarter.
Trade has added to the economy since the first three months of 2007.
The world’s largest economy probably shrank 5 percent in the last three months of 2008 and will continue to contract through the first half of 2009, according to the median forecast of economists surveyed this month.
Imports fell to $183.2 billion, as demand for foreign crude oil, automobiles, computers and televisions sagged, reflecting the deepening slump in consumer and business spending.
The price of imported oil decreased by a record $25.30 a barrel to $66.72 in November, according to today’s report.
Imports from China also declined by the most on record, narrowing the politically sensitive trade deficit to $23.1 billion.
U.S. companies are still pressing for more decreases. During the election campaign Obama pledged to take a harder line against China by forcing it to raise the value of its currency, and by accepting industry petitions to impose quotas, called safeguards, on Chinese imports, reversing Bush administration policy. Textile, steel and other U.S.-based manufacturers say they want Obama to make good on those pledges.
China’s economy will expand 7.5 percent this year, the slowest pace in almost two decades, as their exports slump, according to a forecast from World Bank. The lender also projects international trade will shrink this year for the first time in more than a quarter century.
Exports also plunged in November, declining for a fourth consecutive month as growth overseas slowed. Demand for American-made goods dropped 5.8 percent to $142.8 billion. Foreign purchases of automobiles were the lowest since October 2006.
Today’s report indicates international demand is no longer helping to support factories. The Institute for Supply Management said on Jan. 2 that its export gauge for manufacturers dropped to 35.5 in December, a record low.
Deliveries by Boeing Co. to buyers overseas continued to weaken in November as the world’s second-biggest airplane maker recovered from a two-month strike that was resolved Nov. 1. Boeing delivered 3 aircraft to foreign buyers during the month, down from 4 in October, 6 in September and 23 in August, according to company data.