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Increased Imports Widens the Trade Deficit in November

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The Bureau of Economic Analysis and the Census Bureau said that the U.S. trade deficit widened from $42.1 billion in October to $48.7 billion in November. This was the second consecutive month to see a widening, and it was the largest deficit since April. While both exports and imports were higher in November, the principal driver of the larger deficit was the increase in goods imports. Goods imports rose from $186.8 billion to $195.0 billion, or an increase of 4.4 percent. Meanwhile, goods exports were up just 1.3 percent from $127.7 billion to $129.3 billion.

With lower petroleum per barrel costs, the main driver of the widening trade deficit was non-petroleum factors. In fact, the petroleum trade balance narrowed from $24.6 billion to $23.5 billion on less oil imports. On the other hand, the non-petroleum goods trade balance widened from $33.8 billion to $41.5 billion, its highest level ever.

Looking specifically at goods exports, they were mostly higher, albeit with slow growth (especially relative to imports). These included capital goods, except automotive (up $937 million), automotive vehicles and parts (up $743 million), industrial supplies and materials (up $577 million), and consumer goods (up $65 million). The one major sector with declining exports in the month was foods, feeds, and beverages (down $355 million).

These numbers were more than outweighed, though, by the increases in good imports in the following sectors: consumer goods (up $4.6 billion), automotive vehicles and parts (up $1.5 billion), industrial supplies and materials (up $1.3 billion), foods, feeds, and beverages (up $555 million), and non-automotive capital goods (up $408 million).

Reflecting this slower growth for international sales, manufactured goods exports dropped from $85.9 billion to $83.5 billion, using non-seasonally adjusted data. Despite this drop, year-to-date exports for manufactured goods are up 5.2 percent in 2012 relative to the level seen during the same time period in 2011. This suggests that U.S. businesses continue to find opportunities overseas, even as the pace of growth has obviously slowed with numerous headwinds in international economies.

Chad Moutray is the chief economist, National Association of Manufacturers.