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U.S. Trade Deficit Narrows To Smallest In Four Years In November

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With the value of exports rising and the value of imports falling, the Commerce Department released a report on Tuesday showing that the U.S. trade deficit narrowed by much more than anticipated in the month of November.

The report showed that the trade deficit narrowed to $34.3 billion in November from a revised $39.3 billion in October.

Economists had expected the trade deficit to shrink to $39.9 billion from the $40.6 billion originally reported for the previous month.

With the bigger than expected decrease, the trade deficit was the smallest since the $33.9 billion deficit recorded in October of 2009.

The narrower deficit was partly due to an increase in the value of exports, which rose 0.9 percent to $194.9 billion in November from $193.1 billion in October.

Additionally, the value of imports tumbled 1.4 percent to $229.1 billion from $232.5 billion, with the decrease led by a sharp drop in the value of petroleum-related imports.

James Knightley, senior economist at ING, said, "Much of the narrowing in the deficit was due to petroleum, but even excluding this factor the deficit narrowed."

"As such, this is an encouraging sign for 4Q GDP growth - note that inventory building has been a big GDP growth contributor in recent quarters and this is expected to reverse, but falling imports should offset this to some extent," he added.

The Commerce Department said the goods deficit narrowed to $53.9 billion in November from $58.8 billion in October, while the services surplus widened to $19.7 billion from $19.5 billion.

The report also showed that the politically sensitive trade deficit with China narrowed to $26.9 billion in November from $28.9 billion in October.

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