Trade deficit is shrinking and is below 40 BB

We got a nice surprise on the trade front despite the recent run up in oil prices. The overall U.S. trade deficit in November shrank slightly to $38.3 BB from a revised $38.4 BB gap the month before (original estimate of $38.7 BB). The November deficit was much less negative than market expectations for a $41.0 BB shortfall. A combination of factors led to the improvement. Exports rose 0.8%, following a 3.0% jump in October. Imports rebounded a modest 0.6% after declining 0.8% in October.

The narrowing of the trade deficit was primarily in the nonpetroleum goods gap which eased to $30.3 BB from $30.8 BB in October. The services surplus also edged higher. The petroleum differential widened to $20.1 BB from $18.9 BB the month before.

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