Highlights
The U.S. trade gap surprisingly narrowed to $58.2 billion in November from a revised $58.8 billion shortfall in October. November's figure was notably below market expectations for a $60 billion deficit. The decrease in the trade gap was primarily due a jump in exports of civilian aircraft. In November, overall exports rose 0.9 percent, following a 0.3 percent rise the previous month. Overall imports increased 0.3 percent in November, following a 2.7 percent drop in October. The merchandise trade gap (Census basis) narrowed to $62.8 from a revised $63.3 billion gap in October. December's shortfall is well below the record $74.9 billion set in August 2006.

On the export side, merchandise gains were led by a $673 million jump in capital goods. This included a $576 million increase in shipments of civilian aircraft in November. Gains in goods exports were also seen in autos and consumer goods. Industrial supplies and foods, feeds & beverage exports slipped.

On the import side, merchandise imports gains were led by an $891 million jump in consumer goods imports. Notable gains were also seen in capital goods and in autos. Keeping the increase in overall goods imports soft was a $1.0 billion drop in industrial supplies, following a $5.4 billion decline in October. However, in November the decrease was largely in copper and natural gas imports. The first would dip due to a slowing in manufacturing and the second due to unseasonably warm weather in the U.S. Oil imports actually rose in November but just barely with a $60 million increase, following a $4.6 billion drop in October.

The oil trade deficit widened marginally in November to $18.7 billion from $18.6 billion in October. Crude oil prices in November fell to $52.25 per barrel from $55.47 per barrel in October. The ex-petroleum goods deficit narrowed to $44.1 billion from $44.8 billion in October.

On a bilateral basis, the deficit with China narrowed to $22.9 billion in November from $24.4 billion in October on an unadjusted basis. The gap with Japan also shrank, to $7.9 billion from $8.3 billion, and with OPEC, to $6.8 billion from $7.5 billion in October.

Today's report will add slightly to forecasts for fourth quarter GDP growth due to strong exports and weaker-than-expected imports. The details indicate that consumer demand has been strong but that manufacturing was sluggish, reflecting fewer imports of industrial supplies outside of petroleum. To some degree, this is old news. But the composition of exports and imports suggests that moving forward, manufacturing will benefit from continued gains in exports and there are not as many dollars going abroad as many had anticipated just a few months ago. The numbers should be a positive for equities and the dollar. The stronger numbers for the U.S. economy may have a mild upward push on interest rates. The somewhat stronger economic growth suggests lower odds for an immediate cut in rates by the Fed.

2007 Release Schedule

Released On: 1/10 2/13 3/9 4/13 5/10 6/8 7/12 8/14 9/11 10/11 11/9 12/12 Released For: Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct